South Korean crypto entrepreneur Do Hyeong Kwon allegedly used the services of a Swiss bank to exchange $100 million worth of bitcoin. The SEC is investigating.
South Korean crypto entrepreneur Do Hyeong Kwon and the company he founded, Terra Labs, allegedly withdrew more than 10,000 Bitcoin from their doomed billion-dollar empire. According to the complaint filed by the US Securities and Exchange Commission (SEC), some of those tokens were converted into cash through a Swiss bank.
According to the SEC, Kwon initially put the credentials for 10,000 Bitcoins, equivalent to a total value of about 200 million Swiss francs ($216 million). They were gradually taken out of the company and put into a «cold wallet», potentially a hard drive or USB stick, that is not registered with a digital asset exchange.
Unnamed Bank
Kwon is alleged to have transferred the equivalent of 100 million francs of bitcoins from the wallet at regular intervals starting in June of last year, sending the assets to a bank in Switzerland, and converting the tokens into cash.
It is unclear whether the unnamed Swiss bank is under direct SEC investigation for securities fraud. Many traditional Swiss banks are not yet offering cryptocurrency trading to their customers.
Unstable Stablecoin
The 31-year old Kwon developed the stablecoin TerraUSD, which was supposed to have a constant value of $1 through a mix of algorithms and trader incentives involving its sister token Luna. However, the cryptocurrency was less stable than promised.
After TerraUSD's price fell below $1 in May 2021, the crypto star allegedly persuaded outside investors to support the price with large sums of money, the SEC alleges. In public, the crypto entrepreneur subsequently celebrated the price stabilization as a triumph of the automatically self-healing algorithm.
Whereabouts Unknown
In June of that year, the SEC announced an investigation into Kwon. By September, a South Korean court put Kwon on notice for arrest following a lawsuit filed by investors for violations of capital markets laws.
Kwon's whereabouts are unclear. He is believed to have fled Singapore for Dubai and is now in Serbia, according to South Korean authorities who are seeking extradition but don't have an agreement with Belgrade to do so.
