The U.S. Securities and Exchange Commission accused stablecoin issuer Terraform Labs and its founder Do Kwon of transferring thousands of bitcoin worth millions of dollars to a Swiss bank account following the enterprise’s collapse in May last year, court filings from Thursday show.
The filing alleges the defendants first transferred more than 10,000 bitcoin “from Terraform and Luna Foundation Guard crypto asset platform accounts to an un-hosted wallet,” which was used to store crypto outside of custody or exchange platforms.
“On a periodic basis since May 2022, Terraform and Kwon have transferred – and continue to transfer – Bitcoin from this wallet to a financial institution based in Switzerland and have converted the Bitcoin to cash,” the filing said, adding that since June 2022, more than $100 million was withdrawn from that Swiss bank.
The complaint adds that by the end of May, crypto tokens attached to the enterprise including the stablecoin TerraUSD (UST) and Luna token “were essentially worthless, wiping out more than $40 billion in combined market value.”
The collapse of Kwon’s crypto enterprise last year sent ripples through the industry and set off a series of high-profile bankruptcies that are ongoing. Authorities in South Korea, who are looking for the disgraced founder, have also frozen funds that are suspected to be tied to him.
CoinDesk has reached out to Swiss financial regulator FINMA for comment.
