South Korean authorities have taken action to stop Do Kwon, the founder of the now-collapsed cryptocurrency issuer Terraform Labs, from withdrawing his crypto holdings.
Prosecutors have requested that Binance, the world’s largest exchange, block any withdrawal of crypto assets owned by the disgraced crypto figure.
The move is part of the ongoing investigation into Terraform Labs, which collapsed amid allegations of fraud. Prosecutors estimate that nine executives made a total of 414.5 billion won ($315 million) from the enterprise, with Kwon’s involvement alone being $69 million.
Kwon’s involvement in the Terra fraud
South Korean prosecutors have identified 414.5 billion won ($314.2 million) in illicit assets associated with Terraform Labs co-founder Do Kwon and his associates.
Kwon is accused of tricking investors with Terra and Luna cryptocurrencies to amass a large amount of money. Kwon along with other Terra executives, allegedly took part in fraudulent activities that resulted in the collapse of the Terra ecosystem.
The US Securities and Exchange Commission’s initial investigation into the Terra collapse revealed that Kwon siphoned almost $100 million worth of Bitcoin from Terra post-collapse.
Another report based on an SEC interview with former Terraform Labs revealed that Kwon siphoned $80 million a month before the collapse of the Terra ecosystem.
Kwon’s crypto holdings and property freeze process
Although Kwon reportedly amassed millions, none of the assets tied to him are recoverable or under the jurisdiction of the South Korean authorities.
This is mainly because the now-arrested former CEO converted most of the illicit funds into Bitcoin using overseas crypto exchanges instead of investing in physical assets.
Prosecutors are actively tracing properties associated with Terraform Labs executives to recover some illicit funds from the Terra debacle. The property freeze process is the first step towards recovering the proceeds of crime.
Prosecutors applied foreclosure not only on apartments in Seoul owned by former co-CEO Shin Hyun-seong and others, but also lands in Hwaseong and Gapyeong in Gyeonggi-do, Taean in Chungcheongnam-do, and foreign cars they drove. It is to prevent them from selling or stealing during the trial.
However, Do-hyung had a different situation. Even though he made tens of billions of criminal proceeds, Kwon’s property, which can be collected and preserved, was estimated to be ‘0’ dollars.
It seems that Kwon changed a large part of his property to Bitcoin and transferred it to an overseas virtual asset exchange.
Binance confirms cooperation with prosecutors
Binance has confirmed that they are cooperating with the prosecutors and offering any assistance they need. “We provided Korean LE authorities with the requested assistance. Since we cannot comment on ongoing LE investigations, for any further comment please reach out to the prosecutors.“
The South Korean national was arrested in Montenegro last month as he was attempting to travel with falsified documents. Both South Korea and the US have requested his extradition, with Kwon facing criminal charges in both nations.
Prosecutors are extensively tracing domestic property to collect the astronomical profits they earned from Terra. The prosecution’s estimated criminal proceeds totaled $314 million.