The South Korean prosecutor’s office said that Do Kwon, after his arrest at the end of March, was able to withdraw tens of millions of dollars from an organization that is associated with his blockchain project, which suffered a crushing failure.
During a conversation with journalists, Dan Sunghan, director of the Financial Crimes Investigation Bureau of the Seoul Southern District Prosecutor’s Office, said that the digital tokens, totaling $29 million, were most likely withdrawn either personally by Do Kwon or on his instructions.
Currently, South Korean law enforcement officers are carrying out work aimed at finding the current location of assets. The Prosecutor’s office has data that digital tokens were transferred from a cryptocurrency wallet owned by Kwon’s Luna Foundation Guard (LFG).
Media representatives tried to contact Branko Angelic, Do Kwon’s lawyer, in order to receive comments on the allegations of South Korean law enforcement officers but did not receive any feedback. The entrepreneur himself denies accusations of involvement in violations of the regulatory framework governing the implementation of activities in the financial sector. In February, he posted a message on his Twitter page in which he stated that he had never stolen money and had not received payments that were some kind of secret transactions related to shadow processes.
What happened to the cryptocurrency held by LFG, creating which Do Kwon state that the implementation of this solution would protect the binding of the stablecoin TerraUSD to the dollar, has become the reason for numerous speculative statements and theories of the prosecution. The entrepreneur’s project failed in May 2022. Do Kwon disappeared from public view against this background.
The statements of the South Korean prosecutor’s office are not the first allegations about the withdrawal of funds by the failed emperor of the crypto industry. In February, the US securities regulator announced that Do Kwon had withdrawn 10,000 bitcoins from his companies.
Dan Sunghan also claims that the entrepreneur and his partners still have at their disposal funds in the amount of more than $13 million previously held in, presumably, the Swiss financial institution Sygnum Bank AG, which is focused on cryptocurrency.
The prosecutor’s office claims that Do Kwon or someone else, acting according to his instructions, withdrew the amount and transferred it to another wallet, not to Sygnum, and then cashed the funds elsewhere. It is not known where this money is now.
The representative of the Swiss financial institution did not respond to a request from journalists for comments on the potential actions of Do Kwon. At the same time, there are no claims against the bank.
Do Kwon was arrested in Montenegro at the end of March this year. He was charged with using forged travel documents, which the businessman denies. The American prosecutors announced the involvement of the entrepreneur in the implementation of fraudulent schemes related to the use of cryptocurrencies, for many years. Currently, the United States and South Korea are seeking the extradition of Do Kwon from Montenegro.
The charges by American and South Korean prosecutors are related to the collapse of TerraUSD, a stablecoin that the entrepreneur helped create and which was a central element of the Terra blockchain ecosystem. At the beginning of May last year, TerraUSD refused to link to the dollar. For this reason, there was a drop in the crypto markets, which led to a wave of bankruptcies, from the hedge fund Three Arrows Capital to the crypto lender Celsius Network.
The U.S. Securities and Exchange Commission said that Do Kwon continued to transfer cryptocurrency from his companies Luna Foundation Guard and Terraform Labs to a Swiss bank after the collapse of TerraUSD. According to the regulator, in the period from June 2022 to mid-February of this year, more than $100 million of fiat currency was withdrawn.
Swiss media reported that in April Sygnum transferred more than 70% of $100 million to an escrow account with an international law firm based on a court order. The remaining part of the funds was used to pay salaries and bills owed to Terraform Labs. In this case, the media referred to unnamed sources.