Crypto-sleuth FatManTerra on Saturday shared via Twitter alleged details of how Kwon siphoned money out of his holdings in Luna, a cryptocurrency in which Terraform Labs had solicited considerable investments.
Kwon responded via the social media platform on Sunday, describing the claims as “categorically false” and adding that “spreading falsehoods just adds to the pain of everyone who has lost.”
Last month’s meltdown of both Luna and TerraUSD, Terraform Lab’s flagship cryptocurrency, is widely credited with prompting the recent crypto-market crash that caused more than $300 billion in losses across the industry.
Many crypto experts were skeptical about the technological underpinnings of the virtual currencies backed by Terraform Labs from the very start, according to a report by The New York Times, while Kwon himself previously joked about the prospect of a market collapse.
Even before the crash, authorities had launched probes into Terraform Lab’s operations.
A U.S. court of appeal last week upheld an order requiring Kwon and the firm to comply with subpoenas, issued in September, relating to a Securities and Exchange Commission investigation into possible violations of securities laws related to the company’s “creation, promotion, and offer to sell various digital assets.”
That probe has recently expanded to include potential evidence of money laundering in respect of the alleged $80 million monthly payments, according to South Korean outlet JTBC.
Meanwhile, South Korean prosecutors are reportedly weighing charges of running a Ponzi scheme against Kwon for the way Terraform Labs solicited and managed investments in the assets it offered, having launched a formal investigation into the firm earlier in May.
