Prosecutors Investigate Terraform Labs CEO Kwon Do-hyung on 'Money Laundering Suspicion'

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Byung-don] The prosecution investigating the collapse of the Korean virtual asset Luna (LUNC) is focusing on Terraform Labs CEO Kwon Do-hyung's alleged 'money laundering.' The investigation is expected to accelerate once the new head of the Financial and Securities Crime Joint Investigation Unit assumes office on the 4th of next month.

According to the legal community on the 30th, the Financial and Securities Crime Joint Investigation Unit of the Seoul Southern District Prosecutors' Office has imposed a travel ban for about a month on approximately 15 current and former Terraform Labs executives and employees this month and is investigating them. It is reported that this group includes key developers.

Additionally, the prosecution is considering invalidating CEO Kwon's passport, who is currently abroad. If the passport is invalidated, Kwon could be repatriated to Korea. The prosecution views Kwon's alleged transfer of funds to tax havens as 'money laundering.'

Earlier, on the 15th, the prosecution conducted a search and seizure at the Seoul Regional Tax Office Investigation Division 4 and secured materials related to a special tax investigation conducted by the National Tax Service on a corporation established by CEO Kwon in an overseas tax haven. CEO Kwon, along with Terraform Labs co-founder Shin Hyun-sung and others, was subject to a special tax investigation by the Seoul Regional Tax Office in June last year on suspicion of tax evasion. The National Tax Service confirmed that they diverted profits earned from virtual currency trading to the Virgin Islands, a tax haven, through a Singapore corporation, and imposed approximately 50 billion KRW in corporate taxes and other taxes.

Meanwhile, the Luna incident saw the coin's value plummet by more than 99%, wiping out a market capitalization of 50 trillion KRW, with an estimated 280,000 Korean victims. Five Luna investors filed complaints against Terraform Labs CEO Kwon Do-hyung and others on charges of fraud and quasi-deceptive solicitation, and the case was assigned to the joint investigation unit on the 20th of last month. The total damages claimed amount to 1.4 billion KRW, with one victim reportedly suffering losses exceeding 500 million KRW.