Benzinga - Terraform Labs founder Do Kwon is once again at the center of a high-profile cryptocurrency scandal, with the U.S. Securities and Exchange Commission filing a lawsuit against him and his company, alleging that they engaged in fraudulent activities that led to losses of at least $40 billion.
The allegations stated that Kwon and his team transferred more than 10,000 Bitcoin (CRYPTO: BTC) from their failing project into a so-called "cold wallet" and then moved the assets to a Swiss bank, according to a Bloomberg report.
The funds were then converted to cash, with over $100 million in fiat currency withdrawn from the bank since June 2022.
The case has shed light on the murky world of stablecoins, which are digital currencies designed to maintain a fixed value, often pegged to the U.S. dollar or another fiat currency.
Kwon created the TerraUSD stablecoin, which was intended to hold a constant value of $1 through a combination of algorithms and trader incentives involving a sister token called Luna.
In May 2022, the TerraUSD system collapsed, fueling the cryptocurrency market crash that led investors to lose more than $2 trillion.
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Kwon is currently a cryptocurrency fugitive with his whereabouts unknown.
South Korean authorities have issued a warrant for his arrest, and he is the subject of an Interpol red notice. The country has sought assistance from Serbia, where Kwon is thought to have been hiding.
The case has highlighted the challenges facing regulators in the cryptocurrency industry.
The lack of transparency and regulation in the sector makes it difficult to hold individuals accountable for fraudulent or criminal activity.
Kwon denied any wrongdoing, and neither he nor Terraform Labs have responded to requests for comment on the lawsuit.
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Photo: Do Kwon, screenshot from Terraform video
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