The SEC investigation into Terra is continuing, and it appears that the situation for Do Kwon and Terraform Labs is becoming increasingly critical.
SEC investigates Terra project
First of all, yesterday the US Court of Appeals for the Second Circuit dismissed an appeal by Terraform Labs of a subpoena issued by the SEC against them back in September last year.
While this defeat is not particularly significant in itself, what is relevant is the fact that the SEC’s investigation can and is continuing.
The US agency, in fact, is bringing to light several facts that could implicate Do Kwon and his company.
For example, Bloomberg recently revealed that they too are investigating UST’s management prior to the collapse, alleging that Terraform Labs violated federal investor protection regulations.
Bloomberg claims that this further investigation could further increase the pressure on the company and its founder, in addition to the one on Mirror Protocol.
As yet, there are no official charges in connection with these new investigations, but given what has happened, it is safe to assume that they may come up sooner or later.
As if this were not enough, the Korean agency Naver revealed that JTBC had come into possession of statements provided to the SEC by employees of Terraform Labs, according to which company funds amounting to approximately 100 billion won ($79 million) had flowed out of the company’s coffers every month for unidentified “operating expenses” a few months before the collapse.
These funds allegedly flowed into dozens of crypto wallets, so much so that an investigation was also later triggered on suspicion of money laundering.
In all likelihood, all of these investigations are still only at an early stage, and it is possible that new important revelations will come to light in the coming weeks or months.
Terraform Labs is also accused of money laundering
This means that the SEC investigation into Mirror Protocol has already been ongoing since last year, and Terraform Labs has just lost an appeal in this regard.
The investigation into the management of funds before and during the collapse is already underway. A new one may open shortly on the money laundering hypothesis.
Another one could also begin in relation to the possible accusation of having issued security without the necessary authorizations.
In addition to all this, there are investigations by the Korean police and judiciary, considering that Do Kwon is a Korean citizen, and that dozens of complaints have already been filed against him and his company in South Korea.
It is by no means certain that all this will lead to the finding of facts constituting a crime, so all these charges could also end in an acquittal.
However, what has happened seems to outline a scenario in which it can hardly be said that Terraform Labs and Do Kwon bear no responsibility and did everything in their power to protect investors.
The market, on the other hand, has already made its judgments: the old Luna cryptocurrency, now LUNC (Luna Classic), is now worth practically zero, while the new one, LUNA, has already lost 84% of its value since it was put on the markets a fortnight ago.