Do Kwon, the embattled Co-Founder and Chief Executive Officer of Terraform Labs has been indicted in a money-laundering probe drawing on testimonies from anonymous employees of the company. According to South Korean media platform Naver News, the employees told the United States Securities and Exchange Commission (SEC) that Kwon withdraws $80 million (100 billion won) monthly to external wallets numbering up to dozens.
This latest revelation complicates affairs for the developer who nurtured a protocol that wiped billions off investors’ networth within the twinkling of an eye. The collapse of the algorithmic stablecoin UST, and the Luna Classic (LUNC) token has attracted a lot of legal filings of which Do Kwon is answerable, with the US SEC gradually encroaching also.
The employees who spoke with the American market watchdog also said there have been internal warnings with respect to the unsustainability of the Terra blockchain and model design. The sources claimed despite the teams raising these concerns with Kwon, he often rebuts and neglects them.
The withdrawal of the $80 million was notably being transacted long before the collapse of the native tokens of the protocol.
Compounding Legal Woes for Terraform Labs and Do Kwon
As it stands, the collapse of the UST stablecoin is largely impacting the operations of the Mirror Protocol, a DeFi platform that helps investors mint synthetic versions of US stocks such as Google or Tesla amongst others.
On this, the SEC claimed Terraform Labs were breaching securities laws and issued a subpoena to Kwon last year September. While jurisdictional claims are being used as an argument by Kwon and the company to avoid obeying the subpoena, a 2nd Circuit Court of Appeal has recently ordered Terraform Labs to comply with the subpoena.
Terraform Labs has been dealing with these legal upheavals even though its legal team bailed out back in May with the collapse of UST.
The company is attempting to revive the protocol with the launch of Terra 2.0 and a new LUNA token which initially had a tumultuous launch. With revenues still trickling in from the rejuvenation of the protocol, Terraform Labs may just be liquid enough to face the broad allegations it is facing now.