Do Kwon, co-founder and CEO of Terraform Labs sold crypto assets LUNC and USDT for a countervalue of $2.8 million before being released on bail in Montenegro, where he was previously detained.
The news is causing a stir because those funds are thought to be proceeds of wrongdoing, traceable to the Terra-Luna project before the collapse that evaporated more than $40 billion from the crypto market. Below are all the details of the affair.
Summary
Do Kwon liquidates part of its LUNC crypto holding to bail out in Montenegro
According to sources in South Korea, Terraform Labs co-founder and CEO Do kwon withdrew about $500,000 in USDT from his wallet along with 2.39 million in LUNC crypto before being released on bail by a court in Montenegro, where he was arrested on 23 March.
Kwon and his close associate Han Chong-joon, also an executive at the company that manages the Terra/Luna ecosystem, had been charged with possession of false documents, ending up in jail after trying to board a flight to Podgorica precisely in March this year.
Attorneys for the two individuals had applied for bail, approved to the tune of $436,000 and reportedly paid by the wives of the accused.
However, the discovery of the movement of LUNC and USDT from wallets that appear to be associated with Do Kwon is giving the authorities a pause for thought, especially the US and South Korean authorities who are seeking extradition to Montenegro.
In detail, the US courts believe that Terraform Labs carried out an unauthorized sale of securities and want those responsible to pay for it, despite the denial of Do Kwon’s legal team that it considers the LUNC crypto to be something other than a security token.
Instead, Seoul is hoping to convince Montenegrin officials to deport Kwon to his home country to face fraud charges he and all his fellow members of the inner circle have been accused of.
Recently Marco Kovac, Montenegro’s justice minister, was quoted as saying:
“We will take into account pending proceedings and progress in the Podgorica Primary Court to determine when extradition proceedings will be heard.”
Do Kwon and Han Chong-joon are currently on probation, forced to remain inside the apartment in which they are staying and attend future hearings that will take place in court.
Do Kwon’s problematic situation
Since the Terra-Luna project failed miserably with the depeg of the UST stablecoin and the collapse of Terra, destroying a $40 billion ecosystem, Do Kwon and his entire team have been hounded by South Korean and US regulators, forcing them to find refuge in some small European country like Montenegro.
From 8 May 2022 onward, the date that marked the collapse of the crypto project, Do Kwon went into hiding in Singapore, Dubai, Serbia, and finally Montenegro, despite initially stating on Twitter that he intended to cooperate with the authorities and that he was not hiding in any way.
His intentions probably changed after Interpol issued a “red notice” for precautionary arrest against him.
To date, Do Kwon faces eight charges between the United States, South Korea, and Montenegro, including those of fraud, computer fraud, and falsifying documents.
It is unclear what the fate of the Terraform Labs co-founder will be and whether he will be able to save himself from extradition, given Seoul’s heavy intentions in returning him to his hometown to serve his sentence.
The situation of the 31-year-old South Korean is similar to that of Sam Bankman Fried, who was also involved in a bankruptcy, that of FTX, with which he nevertheless managed to save himself from jail by posting a bail of as much as $250 million.
For Do Kwon, the ending may be grimmer: a Terraform Labs spokesman said South Korea’s case against the company’s executives is politically motivated, driven by a desire to keep public opinion high.
At this time, capital and electronic securities regulations in the Asian country have no legal definition of non-standardized securities issued via blockchain technology. South Korea is moving to do so to regulate the industry.
Price analysis of the LUNC crypto
The LUNC crypto born from the fork of Terra’s original blockchain, with which it abandoned the old ecosystem, now destroyed by the project’s failure, is an asset that is suffering greatly from investors’ bearish selling pressure.
Not to be confused with LUNA, coin of the original blockchain that is traded for $0.94 per unit, LUNC (Terra Classic) is a cryptocurrency with a price of $0,.00009024 and a market capitalization of $530 million.
Unfortunately, the choice to break away from the failed project with a new cryptocurrency and a rebranding of the ecosystem did not help the Terra Classic community to recover.
Indeed, the LUNC crypto has been trading below the 10-period moving average on a daily time frame for months, in a blatantly bearish trend.
Volumes are also decidedly low, typical of scenarios in which a prolonged distribution of the price of an asset takes place. In August 2022, there was an attempt to manipulate the value of LUNC, which rose 5 times its initial value, then lost all the gain made in the following months.
In the short term there may be a brief bullish push given the formation of a “V” in the oversold zone of the RSI, however LUNC remains a decidedly weak asset and out of modern logic and current investor attention.
Many layer 1 and secondary infrastructures are emerging that are much better performing than Terra Classic and without the weight of a resounding failure behind them, hence it is very likely that LUNC will fall into decay in the coming years.
