Do Kwon, Terra's Founder
The infamous co-founder of Terraform Labs has reportedly lost his bid against the US Securities and Exchange Commission (SEC). The latter is now allowed to seek records from the Monetary Authority of Singapore (MAS) that could shed more details on how the 31-year-old developer managed Luna Foundation Guard and whether he had a hand in last year’s LUNA/UST collapse.
Numerous agencies, watchdogs, and prosecutors alleged Kwon was the main culprit of the multi-billion crash. He remains under custody in Montenegro after the local authorities arrested him in March.
According to a recent Bloomberg coverage, US District Judge Jed Rakoff denied Kwon’s request to prevent the SEC from checking his data stored at the MAS.
The agency supposedly has records indicating how the Luna Foundation Guard (a non-profit organization behind the collapsed Terra ecosystem) was established and raised funds to keep the value of the algorithmic stablecoin – UST – at $1.
The asset lost its peg in May 2022 and plunged way below its price target. Since the native token was closely connected, users started minting more LUNA to stabilize the fallout. This created an infinite arbitrage loop, which eventually ended with both tokens’ prices going to zero.
The meltdown triggered colossal losses, and some started looking for the reasons behind it. The US SEC was among the agencies that claimed Do Kwon and Terraform Labs were to blame. It filed a complaint in February, arguing they orchestrated a crypto fraud that resulted in multi-billion-dollar losses for investors.
The former crypto mogul was reluctant to cooperate with regulators at the time of the crash and escaped his homeland. Multiple sources hinted that his hiding destinations in the past several months included Dubai, Seychelles, Russia, Mauritius, and Serbia.
Kwon, who had a red notice issued by Interpol, was finally arrested at the airport of Podgorica (the capital of Montenegro) last month after allegedly trying to flee to another country, carrying a forged Costa Rican passport.
He will most likely remain under custody in the Balkan nation for an extended period of 30 days before being extradited to the USA or South Korea. If found guilty in the States, he could face more than 100 years in prison, while the maximum penalty in his homeland would be “just” 40 years.