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New Report: Terra Founder Do Kwon Sent Millions of Dollars to Law Firm Before Collapse of Terra – Here’s What You Need to Know

Ruholamin Haqshanas
Last updated: | 2 min read
Image Source: Reuters

Terraform Labs founder Do Kwon sent millions in funds to a local law firm in South Korea just before the implosion of the Terra ecosystem.

Kwon sent 9 billion won ($7 million) to lawyers at Kim & Chang, the largest law firm in South Korea, just before the collapse of the firm’s algorithmic stablecoin UST and its sister cryptocurrency Luna, South Korean media KBS News reported last week. 

In a Monday text message, the prosecutors’ office in Seoul confirmed the report, claiming that the revelation “isn’t false.”

The KBS report speculated that Kwon’s move to send money to lawyers suggested that he was aware that he would face legal problems following the collapse of his crypto empire. 

Lawyers from Kim & Chang left for Montenegro a few days ago to meet with Kwon and Terraform’s former chief financial officer, the report added. 

“We are unable to provide specifics on individual cases,” Kim & Chang reportedly said in a comment when asked about the report from KBS News. 

“We have conducted our legal advisory services as usual and have legitimately received the fee for the services.”

As reported, Montenegro’s Minister of the Interior, Filip Adzic, announced via Twitter last month that an individual suspected of being Do Kwon has been arrested at Podgorica airport. 

Subsequently, South Korean police said that the identity of the suspect arrested in Montenegro had been confirmed as Kwon after his fingerprints matched the information held by the country’s National Police Agency (KNPA).

Do Kwon is the co-founder and CEO of Singapore-based Terraform Labs, the company behind the crashed stablecoin TerraUSD and cryptocurrency Luna.

TerraUSD used a mix of algorithms and trader incentives involving a sister token, Luna, to maintain its $1 peg. 

However, the stablecoin lost its dollar peg in May last year after a wave of sell-offs hit the crypto market. 

US prosecutor estimate that the crash of the Terra ecosystem drained at least $40 billion from investors.

Both US and South Korea Requested the Extradition of Kwon

After Kwon’s arrest, Montenegro authorities confirmed that both the US and South Korea have requested the extradition of the disgraced crypto boss. 

The officials added that the fate of Do Kwon rests in the hands of a judge. 

“Consideration will be given to the gravity of crimes, location of committed offenses, sequence of requests, as well as citizenship” of the suspects, Montenegro’s Justice Minister, Marko Kovac, said. 

Earlier this month, Do Kwon was charged with eight counts of fraud in New York, which include two counts each of securities fraud, wire fraud, commodities fraud, and conspiracy. 

US prosecutors alleged that Kwon made a series of false and misleading statements during a TV interview about the extent to which the Terra blockchain had been adopted by users.

Likewise, in mid-September, a Seoul court issued an arrest warrant for Kwon, following a criminal probe into the collapse of the Terra ecosystem. 

South Korea has also charged Kwon with violating the Capital Markets Act and committing fraud. 

Meanwhile, prosecutors in Montenegro have said they will bring charges against Kwon and his aide for falsifying official documents, which could result in a maximum of six-month time in jail.