On Thursday, the U.S. Court of Appeals for the Second Circuit ruled that Terraform Labs CEO Do Kwon must comply with a subpoena issued by the SEC back in September.
The U.S. Securities and Exchange Commission is reportedly investigating last month’s Terra-led market crash, which created additional trouble for Do Kwon and his co-founders.
The U.S. agency will investigate whether the marketing of the TerraUSD stablecoin violated federal investor protection regulations before a massive market disruption, sources told Bloomberg. This will require an investigation to check for violations of other rules on securities and investment products, including CEO Kwon’s alleged money laundering.
Report says SEC has evidence of money laundering
With new allegations of money laundering against Do Kwon, the SEC is reportedly putting figures of around $80 million as evidence. The money flowed out as the company’s monthly operating expenses across many crypto wallets in the months before the collapse, the report said.
An internal statement from a local reporter said the SEC said “funds flowed into dozens of cryptocurrency wallets.”
Although some anonymous sources in the media also claim that Kwon is not officially getting any compensation from Terra.
Additionally, local reports say the SEC recently conducted video interrogations of some of Terra’s key designers. JTBC reporters claim that the main designers predicted Terra and Luna’s debacle before it actually happened, and did nothing to avoid it.
“We are currently unaware of any SEC investigation of TerraUSD — we have not received such communications from the SEC and are unaware of new investigations other than those involving mirror protocols,” Terraform Labs previously stated .
The Mirror is a Defi protocol on Terra that replicates the performance of stocks while using UST as stable collateral.
Do Kwon thinks most chatter is ‘misinformation’
Meanwhile, Do Kwon recently said on Twitter that “soon we will be more proactive in communicating with the media and getting the right information.” After staying silent for a long time, the co-founder commented that “there are A lot of misinformation and lies,”
Meanwhile, South Korean authorities have launched a formal investigation into Terraform Labs, filing several class-action lawsuits against co-founders Do Kwon and Daniel Shin for allegedly “fraudulent” property seizures.
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