The US Securities and Exchange Commission (SEC) alleged that Terra founder Do Kwon moved 10,000 Bitcoins (BTC), worth about a quarter of a billion dollars, as the LUNA ecosystem collapsed in May of last year.
In a complaint from the SEC, the regulator says Kwon took BTC out of Terraform Labs and Luna Foundation Guard (LFG) and transferred it to a Swiss bank account.
The SEC claims that so far, over $100 million worth of BTC has been converted into cash since June of last year.
“Defendants continue to retain valuable revenue from the Terraform ecosystem. Specifically, the defendants transferred over 10,000 Bitcoins from Terraform and Luna Foundation Guard crypto-asset platform accounts to a non-hosted wallet or cold wallet (ie, a self-hosted wallet not located on any exchange).
On a periodic basis since May 2022, Terraform and Kwon have transferred – and continue to transfer – Bitcoin from this wallet to a Swiss-based financial institution and converted the Bitcoin into cash.
From June 2022 to the date of this complaint, more than $100 million in fiat currency has been withdrawn from this Swiss account.”
The SEC formally charged Kwon with defrauding investors in connection with LUNA and Terra USD (UST) last week.
As SEC Chairman Gary Gensler stated,
“We allege that Terraform and Do Kwon failed to provide the public with full, fair and true disclosure as required for a number of crypto securities, notably LUNA and Terra USD. We also claim that they committed fraud by repeating false and misleading statements to build confidence before causing catastrophic losses to investors…
This case demonstrates the lengths to which some crypto companies will go to avoid compliance with securities laws, but it also demonstrates the strength and commitment of the SEC’s dedicated public servants.”
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Featured image: Shutterstock/petrov-k/WindAwake