Do Kwon and his company, Terraform Labs (TFL) have come under fire in recent weeks after Terra’s historic collapse a month ago. And now, the U.S Securities and Exchange Commission has reportedly launched an investigation into the Terra implosion.
Allegations of money laundering have been leveled against Do Kwon and his company. The SEC reportedly discovered a situation where $80 million dollars of the company’s funds every month were sent to different wallets for the operating expense. This reportedly happened a few months before the collapse of Terra.
Some interviewed employees confirmed to the SEC that Do Kwon transferred funds to the tune of $80 million a month from company funds to secret crypto wallets and foreign bank accounts.
The said employees, who were interviewed remotely, confirmed that they warned Kwon about the dangers inherent in the design flaws of the Terra ecosystem, but Kwon ignored the warnings and went on with his money laundering spree.
On Wednesday, Terra Anchor Developer confirmed that Do Kwon deliberately raised interest from 3.6% to 20% a week before launch, causing the UST crash.
“Just before the launch, I suggested to CEO Kwon that the interest rate should be lowered, but it was not accepted,”
Further evidence has also surfaced to mount more pressure on Do Kwon. According to a pseudonymous Twitter user – FatMan, a self-acclaimed Terra insider, Terra and its founder, Do Kwon, knew what would happen to Luna and UST before things went south for the two tokens.
If these charges are proven with enough evidence, Do Kwon and TFL could find themselves in more trouble than they are right now. The two entities are already facing tax evasion charges in South Korea, with the taxman demanding around $78 million in tax settlement and fines.
Do Kwon response
Responding to these unfavourable reports about TFL and himself, Do Kwon took to Twitter yesterday to comment about the company during the days when the project was still under development.
He, however, dismissed these reports. He urged the cryptocurrency community to run a quick check on Terra’s code to discover whether such occurred.
“Open source development is transparent, and I would urge the media to check if a single line of code by your ‘experts’ has ever made it into production,” Kwon said.
Do Kwon further stated that TFL and the company will be more proactive in communicating to the press going forward, in order to disclose the right information to the public.
For the time being, Kwon has taken his Twitter account private, allowing only a handful of his followers to gain access to his account.
Although it is not clear why he took the action, Kwon suggested on those tweets that Terra’s builders need to be left alone to concentrate, as these negative reports could cause distractions.
“I remain excited by the continued passion and ingenuity of Terra’s builders as the community navigates this difficult time – let’s leave them alone to build.”
Terra 2.0 struggles
Due to the allegations of fraud, manipulation of lies against the company behind the project, the new Terra 2.0 network doesn’t seem to be the big comeback story some investors had been hoping for.
As the days come by, the project is turning out to be quite the opposite, falling apart in a spectacular fashion less than two weeks into its existence.
After debuting at about $18 on May 27, the coin saw only a brief gain before tanking down to $4. Since then, the coin is failing to put on a convincing rally, instead slipping further downward.
According to data from Coinmarketcap at press time, LUNA is trading at just $3.08, 84.45% down from its ATH of $19.54.
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