The U.S. Securities and Exchange Commission (SEC) has alleged that Terra founder Do Kwon transferred 10,000 Bitcoin (BTC), currently worth about quarter of a billion dollars, as the LUNA ecosystem was collapsing in May of last year.
In a complaint from the SEC, the regulator says that Kwon took BTC out of Terraform Labs and the Luna Foundation Guard (LFG) and transferred it to a Swiss bank account.
The SEC alleges that so far, over $100 million worth of BTC has been converted into cash since June of last year.
“Defendants still retain valuable proceeds from the Terraform ecosystem. Specifically, Defendants transferred over 10,000 Bitcoin from Terraform and Luna Foundation Guard crypto asset platform accounts to an un-hosted wallet, or cold wallet (i.e, a self-custody wallet that is not 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 financial institution based in Switzerland and have converted the Bitcoin to cash.
Between June 2022 and the date of this complaint, over $100 million in fiat currency has been withdrawn from that Swiss account.”
The SEC officially charged Kwon with defrauding investors in relation to LUNA and Terra USD (UST) last week.
As stated by SEC Chair Gary Gensler,
“We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD. We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors…
This case demonstrates the lengths to which some crypto firms will go to avoid complying with the securities laws, but it also demonstrates the strength and commitment of the SEC’s dedicated public servants.”
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