The Federal Bureau of Investigation is the latest agency to commence an investigative probe against Terraform Labs and its disgraced founder and CEO, Do Kwon.
FBI Probes Do Kwon
After the Singapore police, South Korean law enforcement, and the SEC launched their own enforcement actions against the disgraced founder of Terraform Labs; the FBI has also decided to look into the matter.
According to the Wall Street Journal, the Federal Bureau of Investigation (FBI) and a few prosecutors from the Southern District of New York (SDNY) are questioning former employees of the now-defunct company, which was behind the Terra-Luna stablecoin that collapsed in May 2022 and wiped out billions of dollars of value from the crypto market.
Do Kwon Still In Hiding
The company’s founder, Kwon Do-Hyung or Do Kwon, who is a South Korean citizen, has been the target of many investigations from countries across the world. He is also on the Interpol Red Notice as his location is not known to any of these law enforcement agencies and government bodies. Intelligence reports have claimed that he is hiding out in Serbia.
However, in an interview in October 2022, Do Kwon claimed that he was not hiding and had not disclosed his location to protect his safety. He also claimed that he had personally not received the arrest warrant released by South Korean law enforcement. Do Kwon had also categorically denied all allegations of fraud at the company and claimed that he himself had lost funds as a result of the stablecoin crash.
The Chai Factor
The FBI’s investigations are raising the same questions as that of the SEC lawsuit filed against the company and its founder. In their February 2023 lawsuit against the company, the regulatory body alleged that Do Kwon knowingly misled investors regarding certain transactions on the Terra blockchain.
The involvement of the South Korean payment platform Chai has been questioned by the SEC and the FBI. In fact, the SEC alleged that Do Kwon falsely claimed to investors about Chai transactions being processed on the Terra blockchain when in fact, Chai had used more traditional channels. The SEC alleged that Do Kwon lied about this to investors in order to bring a false sense of legitimacy to the business.
Since the FBI and the SDNY are both agencies within the Justice Department, the latter is also involved in these investigations. However, the DoJ has not addressed if any charges will be filed against Do Kwon and his firm.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
