Overview of FBI Probe
- The Federal Bureau of Investigation (FBI) has commenced an investigative probe into Terraform Labs and its disgraced founder and CEO, Do Kwon.
- Do Kwon is the target of multiple international investigations and is on the Interpol Red Notice for his unknown location.
- The FBI’s investigations are raising questions about Do Kwon’s involvement with the South Korean payment platform Chai.
The Singapore police, South Korean law enforcement, and the Securities Exchange Commission (SEC) have all launched enforcement actions against the now-defunct company Terraform Labs and its founder Do Kwon. The company was behind the Terra-Luna stablecoin that crashed in May 2022, wiping out billions of dollars‘ worth of value from the crypto market. In October 2022, Do Kwon claimed he was not hiding out nor had disclosed his location to protect himself and denied all allegations of fraud at his company. He also stated that he personally lost funds due to the crash.
In February 2023, the SEC filed a lawsuit against Terraform Labs and Do Kwon alleging that he misled investors regarding certain transactions on the Terra blockchain involving South Korean payment platform Chai. They accused him of claiming that Chai transactions were processed on their blockchain when in fact they used more traditional channels. This allegedly gave a false sense of legitimacy to their business.
> The FBI and prosecutors from the Southern District of New York (SDNY) are questioning former employees of Terraform Labs in regards to this case. The Department of Justice has yet to address if any charges will be filed against Do Kwon or his firm.