Do Kwon is suspected of stealing $80 million per month from the stalled Terra project

A Twitter handle with 1.1 million followers, @WatcherGuru, had claimed that Do Kwon had been removing $80 million per month before the LUNA/UST catastrophe, as per Terra employees who spoke to SEC investigators.

“BREAKING: Terra employees reportedly confirmed to the SEC that Do Kwon cashed out $80 million a month prior to the $LUNA and $UST crash.” the handle wrote.

It’s been a month since UST lost its dollar peg, resulting in a $60 billion loss. Whistleblowers and online detectives have come out to expose a complicated network of fraud & mismanagement claims.

There are allegations that powerful industry insiders were involved, that coding flaws in the Mirror Protocol have been exploited and kept under wraps, and that money was laundered.

Given the seriousness of the allegations and the magnitude of the resulting destruction, it was only a question of time before officials started looking into it.

Terra is the subject of an investigation by the Securities and Exchange Commission (SEC).

The demise of the Terra Classic ecosystem is being investigated by officials in South Korea and the United States.

According to the Financial Times, South Korean officials are looking into fraud charges against parent company Terraform Labs. At the same time, the U.S. Securities and Exchange Commission is investigating whether the UST stablecoin’s marketing violated federal investor protection guidelines.

“SEC enforcement attorneys are investigating whether Terraform Labs, the company behind the UST coin, violated securities and investment product rules.”

Under U.S. securities regulations, a virtual currency may be subject to the SEC’s jurisdiction if U.S. people invested in the token to profit from the project’s efforts.

Outside of inquiries regarding the Mirror Protocol, Terraform Labs responded that they are uninformed of any new SEC investigations.

“At this moment, we’re not aware of any SEC probes concerning TerraUSD—we’ve had no such information from the SEC, and we’re not aware of any additional inquiry outside of the Mirror Protocol investigation.”

Twitter crypto community reacts

“The LUNA rabbit hole runs deep,” crypto YouTuber Lark Davis said of the allegation that Do Kwon took $80 million per month.

“Apparently Do Kwon was cashing out 80 million a month and stashing it in a secret account in the lead up to the collapse of $ust. The $luna rabbit hole goes deep.”

Meanwhile, @FatManTerra claims that removing hundreds of millions of dollars is both fraud and a direct cause of UST de-pegging.

“Reminder that Do Kwon’s hundreds of millions in ‘operational expenses’ isn’t just fraud; it deliberately exacerbated the collapse by removing key liquidity from Curve and LUNA order books (making it easier for UST to depeg and harder for on-chain arb to catch up).”

Michal van de Poppe, the founder of crypto consulting company Eight, compared Do Kwon to convicted fraudster Bernie Madoff, stating, “honestly, he deserves jail.”

“The fact that Do Kwon has been sending $80 million towards his own wallets. Honestly, he deserves jail. Many investors have been losing tons of money and he just goes away with a big bunch of money. Even Madoff got into jail. He deserves it too.”

On June 9, Do Kwon responded to the charges on social media, claiming that the narrative was being driven by misinformation and fabrication. He pledged to make certain that the correct information was distributed.

“There’s a lot of misinformation and falsehood out there, and we promise to do our part in making sure as much of it is correct as possible,” Kwon stated.