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Terra Founders Reportedly Ordered to ‘Notify Upon Entry’ and ‘Departure Ban’

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Do Kwon and Daniel Shin, executives of Terra Labs, have received “notification upon arrival” and “exit restriction” notifications from South Korea’s crime investigation team. The prosecution’s request for more investigation into fraud accusations against TerraForm Labs and its executives is approved by the South Korean Ministry of Justice.

Terra’s new restrictions were published by a local media

According to local news outlets on July 27, the South Korean Ministry of Justice granted permission for the Joint Financial and Securities Crime Investigation Team of the Seoul Southern District Prosecutors to issue a “notice upon arrival” on Terra’s Do Kwon.

A “departure restriction” has also been placed on TerraForm Labs’ current and past leaders, including co-founder Daniel Shin and former Vice President Kim Mo.

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Terra Founders Reportedly Ordered to ‘Notify Upon Entry’ and ‘Departure Ban’ 2

The notifications will assist the fraud investigation team in further investigating Do Kwon after his return from Singapore on suspicions of fraud and money laundering. In addition, several executives will be examined in connection with the (UST) and (LUNA) collapses.

Do Kwon is also charged with continuing to promote (LUNA) coins without disclosing the investment dangers. Additionally, he must appear in court for hearings related to litigation Terra investors have brought against him.

Leading legal firms Scott+Scott Attorneys at Law LLP, The Rosen Law Firm, and Bragar Eagel & Squire has brought three class action lawsuits against TerraForm Labs, Do Kwon, and related parties in the United States.

“FatMan,” a Terra insider, yesterday stated through a tweet that he will be joining lead plaintiff Nick Patterson in the Scott+Scott class action case as a plaintiff. Another class action lawsuit for fraud against hundreds of investors is also being prepared against Do Kwon.

Since losing favor, the team partitioned its network and gave the new blockchain the name “LUNA.” The previous blockchain is currently known as LUNA Classic (LUNC).

LUNA’s price was $1.72 at the time of publication, up 2.4 percent over the previous day. LUNC, on the other hand, was up 4.3 percent in the previous day’s trade at $0.0000948.

Terra Is Facing Another Class Action Lawsuit

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A new class action lawsuit has been brought on TerraForm Labs, its founder Do Kwon, its director of research Nicholas Platias, and other companies.

The class action complaint has been filed by Bragar Eagel & Squire PC accusing the defendants of breaking the California Common Law, the Exchange Act, the Securities Act, and the Racketeer Influenced and Corrupt Organizations Act (RICO).

Terra faces three class action lawsuits

In a news statement on July 25, Bragar Eagel & Squire PC disclosed that it has filed a class action lawsuit against TerraForm Labs, its founder Do Kwon, and Nicholas Platias.

In addition, affiliates like GSR/GSR Markets, Three Arrows Capital, Republic Capital, Republic Maximal, Tribe Capital, DFinance Capital, and DFinance Technologies (3AC).

All investors, including people and businesses, who bought or obtained LUNA tokens between May 20, 2021, and May 25, 2022, are included in the class action lawsuit.

In the case, Terra Labs and other defendants are charged with breaking Exchange Act rules. Investors claim that the company misled them, causing them to purchase LUNA Tokens at inflated rates. The defendants reportedly carried out a strategy and set of actions to entice investors.

The defendants are charged with approving false claims that were deceptive and of which they knew or ought to have known. The complaint also asserts that by failing to register their token, Terraform Labs and other defendants violated Securities Act restrictions.

The investigating teams from South Korea and the United States had already agreed to exchange information on their investigations into Do Kwon and the LUNA disaster.

In reality, South Korea’s investigative team searched 15 cryptocurrency businesses and exchanges, as well as co-founder of TerraForm Labs Daniel Shin’s residence and offices, last week, stepping up inquiries into claims that Do Kwon and TerraForm Labs committed fraud.

Terra’s USTC and LUNC values have fallen as a result of the new round of investigations; previously, they had been steadily rising as a result of community-led token burning.

Cryptocurrency scammer to lose a decade in jail

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Matthew Ho, the famous cryptocurrency scammer has been jailed for 10 years after stealing identities for his theft.

According to The Straits Times, Singaporean citizen, Ho, aged about 32 years, was sentenced to ten years in prison for using stolen identities to buy cloud computing services and mine Ethereum, the second-largest cryptocurrency. His father has posted a $180,000 bail.

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One of the victims of the fraud was Marc Merrill, a co-founder of Riot Games and the man behind the well-known multiplayer computer game League of Legends.

On a dark web forum, Ho discovered Merrill’s American Express credit card information. In November 2017, he was able to take over the game developer’s Amex account and use it to sign up for the Amazon Web Service (AWS). Merrill got access to “elevated levels” of AWS’s cloud computing capabilities because he was a renowned game creator.

Cryptocurrency stolen using Amazon and Google servers

Ho was able to deceive Amazon by using a forged copy of Merrill’s driver’s license thanks to his expertise in document forgery. However, over the aforementioned period, the South Korean impostor was able to mine $350,000 worth of ether, the second-largest cryptocurrency in the world.

Within a few months, Merrill accrued debts totaling more than $5 million. Only in January 2018 was the fraud exposed. Additionally, he paid a quarter-million dollars for Google’s computing services using Merrill’s identity.

The victim (Merrill) was not previously identified, even though the Department of Justice made public the accusations against Ho in October. Due to the ongoing investigation, Riot Games declined to comment. It’s unknown how his credit card details and private information were taken.

According to a search warrant for the accused’s Facebook account, Ho employed many strategies to deceive Amazon into thinking he was Merrill, the co-creator of the hugely successful, $20 billion-generating League of Legends game. According to the court document, he utilized an email address that seemed to be a real Gmail for the Riot Games co-chairman and made a phony California driver’s license with Merrill’s name on it. According to the feds, he provided Amazon with one of Merrill’s actual home addresses as additional “evidence” of identification.

Upbit Urge Caution On Investment In Tron & Waves’ stablecoins

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South Korea’s largest crypto exchange Upbit warns of possible risks to TRON [TRX] and WAVES after the duo’s algorithmic stablecoins projects- USDD and USDN started de-pegging. The TRON’s USDD has headed towards its all-time low at $0.57.

WAVES’ Neutrino USD too followed suit to stand at 95 cents, at press time. In the notice issued, the trading platform stated,

There is a concern that the pegging of USDN and USDD is not going well. As a result, the possibility of price fluctuations of WAVES and TRON [TRX] associated with each of the above stable coins may increase, so please be careful about investing in WAVES and TRON [TRX].

Upbit, further said it will continue to monitor these algorithmic stable coins or related digital assets, and urged members to be aware of increased price volatility if the de-pegging phenomenon escalates in the future.

Following the TerraLuna meltdown, stablecoins have been bearing the brunt and are on the brink of annihilation. Attention has been particularly shifted to Tron’s USDD as it continues to fall, with founder Justin Sun vowing to deploy $2 billion to prop up.

Amidst the current market mayhem, regulators around the world including South Korea have been putting up guardrails.

Upbit Removes Litecoin Over Privacy Function Concerns

A day ago, five South Korean cryptocurrency exchanges including Upbit announced to collectively delist Litecoin citing the crypto asset’s Mimblewimble Extension Blocks [MWEB] upgrade violates the country’s laws.

Three days back, South Korea’s Financial Supervisory Service [FSS] began an investigation into payment gateway services that focuses on digital assets. The FSS is the nation’s financial watchdog that operates under the Financial Services Commission [FSC], both of which are government institutions.

As per a local source, the FSS had recently demanded reports from 157 payment gateways about any service related to crypto, its plans for the future, and the disclosure of digital assets. But, an FSS report stated that only six held any digital assets.

The country’s authorities on May 31, 2022, announced that it is planning to launch a Digital Assets Committee which is deemed as a temporary solution to bring structure to the virtual asset industry following the Terra fiasco.

The proposed committee would bring forth new guidelines including screening criteria for newly-listed assets, market monitoring, trade monitoring, a level of disclosure, and other investor protections.

Binance Drops Confidential Litecoin Transactions

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Binance announced that it has halted deposits and withdrawals of Litecoin [LTC] that utilize the MimbleWimble Extension Blocks [MWEB] function, which provides users with an option of sending anonymous LTC transactions without revealing any transaction information.

In the notice issued, Binance cautioned against any further LTC deposits made to the platform through the MWEB function. If done, users might risk losing funds as the exchange would be unable to verify the sender’s address,

“To ensure the security of your funds, please do not deposit LTC through the MWEB function”, it added.

Litecoin is one of the earliest alternative coins [altcoins] that came to being after Bitcoin [BTC]. Created in October 2011, the MimbleWimble upgrade was first developed more than two years ago as part of the Litecoin Improvement Proposal.

Not limited to just scaling privacy features for LTC users, the upgrade also claims to help reduce needless transaction data from the blocks to the minimum using its cut-through feature.

Despite the hype around the LTC’s transactional confidentiality, it met some regulatory roadblocks, particularly with regard to Anti-Money Laundering [AML] and Know Your Customer [KYC] laws.

In fact, it was why leading exchanges in South Korea had removed the coin from their platforms. 

In another different development, Binance has temporarily halted Bitcoin [BTC] withdrawals due to extreme market turbulence, CEO Changpeng Zhao tweeted today.

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Binance Drops Confidential Litecoin Transactions 5

The brutal market condition has sent shockwaves across quarters. On the same day, crypto staking platform Celsius too paused withdrawals and transfers referencing the current mayhem that has engulfed the crypto market.

As reported by TronWeekly, the platform’s token CEL has lost more than half of its value in the ensuing bloodbath.

Binance Under Regulator’s Lens Once Again

Recently, Binance has also been in the midst of regulatory headwinds. CEO CZ Zhao said the Securities and Exchange Commission [SEC] has been “asking questions” about the BNB exchange token but the exchange hasn’t yet been subpoenaed.

The SEC has declined to comment about the presence of a probe, citing policy limitations.

Separately, Binance is also under investigation by the Justice Department, the Commodity Futures Trading Commission [CFTC], and the Internal Revenue Service [IRS].

Anchor Dev Claims To Have Warned Do Kwon Over Dialing up 20% Interest Rate

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In an interview with a Korean media source JTBC, a core Anchor protocol developer, claimed that it was originally supposed to offer a 3.6 percent interest rate but that it was increased to 20% just a week before its introduction to attract more investors.

Mr. B stated that the platform was only designed to deliver a 3.6 percent interest rate and that this was a critical component of maintaining the Terra ecosystem’s stability because it took into account the cash in Anchor’s war chest.

Mr. B, on the other hand, said that a week before the launch, the developers discovered that the plans were revised and that investors could now earn a very high 20% interest by locking up their TerraUSD Classic (USTC) stablecoins in the Anchor Protocol instead.

“I did not know that this would go out with such a high-interest rate. Set to 20% just a week before the release.”“I thought I was going to collapse from the beginning. (I designed it), but it collapsed 100%.”

Said the employee, referred to only as Mr. B

Anchor protocol’s 20% interest was to attract investors

The JTBC also claimed to have obtained internal Terraform Labs design documents, which discussed attracting investors with high-interest rates. Just before the April 2019 launch, the developer says he tried to bring this issue to Terra Luna founder Kwon Do-Hyung (Do Kwon):

The precipitous decline of Terra Classic (LUNC) and the algorithmic stablecoin USTC has prompted the South Korean government to announce intentions to establish a new Digital Asset Committee in June to act as a watchdog over the country’s crypto industry, preparing and enforcing policies.

Do Kwon has been summoned to a parliamentary hearing in South Korea in mid-May on the topic. Despite this, Terra’s co-founder managed to revive the network on May 28 with Terra 2.0, also known as Pheonix-1, a new chain targeted at restoring the Terra (LUNA) and TerraUSD coins (UST).

The Intruder Who Visited Do Kwon’s Home Speaks to the Public

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Do Kwon is going through the worst month of his life. The abrupt demise of two popular digital coins in early May stunned investors, wiping $400 billion (£318 billion) off the value of numerous other cryptocurrencies, including the most valuable, Bitcoin. People who have lost their life savings are now begging for aid all across the world. After visiting the residence of Do Kwon at the center of the “crypto crash,” one desperate man was detained. His life was in shambles, he told BBC News.

Fortunes can be won and lost quickly in the fickle world of cryptocurrencies, but one guy in South Korea has been hit particularly hard by the May 2022 crypto crash.

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The Intruder Who Visited Do Kwon’s Home Speaks to the Public 7

Do Kwon’s home visitor speaks up

“I felt like I was going to die.” “I lost a lot of money in a short period of time. Around $2.4m (£1.9m) of my cryptocurrency was wiped out.”

Chancers the cryptocurrency streamer

Chancers has been investing in cryptocurrencies since 2017 and claims to have amassed a fortune in the last five years as the value of Bitcoin and other digital coins has increased.

“Here in Korea I was in the top 1% in terms of my finances. But thanks to the crash, I’m now in trouble.”

Chancers told BBC News

At the worst possible time, Chancers put $800,000 into Terra Luna. Terra Luna gained notoriety in December 2021, when the value of each coin began to rise, from $5 to $116 in April of the current year.

Chancers, like many others, placed a large wager on the coin’s continued rise. However, on May 9, it abruptly plummeted, shedding 99 percent of its value in just 48 hours. Each Terra Luna coin now has a value of less than $0.0002, or two-hundredths of a penny.

Thousands of people flocked to the 30-year-old on social media for answers and a strategy to get the situation under control.

Chancers, in his despair, determined to go one step beyond. He searched online for Do Kwon’s home address in Seoul, enraged by the crypto millionaire’s lack of communication.

“I wanted to ask him about his plans for Luna. I suffered a huge loss and wanted to talk to him directly.”

Chancers

When Do Kwon’s wife opened the door and stated her husband was out, he was dismayed. Worse was to come, as he was arrested after the police were notified.

Do Kwon is putting forth every effort to resurrect Terra LUNA. The founder has proposed that LUNA be Hard Forked without any ties to UST or other algorithmic elements.

Terraform Labs Is Reportedly Being Sued for 100 Million Won for Tax Evasion

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Terraform Labs has been fighting for survival as one after the other; the problems seem to pile up. According to reports, Terraform Labs faces a tax evasion fine of 100 billion won ($78.5 million) from the South Korean authorities.

Do Kwon will face charges for reported tax evasion and will have to pay a penalty of 100 billion won ($78.5 million) for failing to pay corporate tax, according to South Korean news agency Naver. Kwon was rumored to be considering liquidating the company and relocating to Singapore due to his dissatisfaction with the country’s tax policies.

Terraform Labs were reportedly trying to evade tax payments

According to the news agency, Terraform Labs was attempting to liquidate the company and relocate its headquarters to another country. Many people were suspicious of the decision, believing it was a ruse to avoid paying taxes. According to the news agency’s sources, Do Kwon was notified by the National Tax Service that he owed 100 billion won ($78.5 million) in taxes.

Ancore and Terraform Labs had been probed by the National Tax Service. Corporate and income tax evasion lawsuits were filed against the corporations.

Do Kwon also owned a 92 percent share in Terra Singapore, according to a separate inquiry. However, the company’s chairman, Shin, ignored any ties to Terraform Labs. Later, it was discovered that he possessed an 8% investment in Terraform Labs.

Last October, the National Tax Service announced an investigation into Terra Virgin, which resulted in a 4.66 billion won income tax penalty. Terra Virgin is a wholly-owned subsidiary of Terra Singapore.

The tax service also discovered that Terra Virgin and Do Kwon sent free LUNA to LFG, a Singapore-based company. Terraform Labs was nabbed in the midst of transferring LUNA to avoid paying taxes, according to the news source.

Because the corporations were regarded as domestic firms, the entire decision to levy the tax was made. Despite the fact that the companies were founded and run in Singapore, the actual administration of the companies is based in Korea.

“Burn LUNA” Gains Momentum As Do Kwon Proposes A New Terra 2.0 Chain

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“Burn LUNA” hashtags continue to gather steam on Twitter even as Terraform Labs creator Do Kwon made his intention clear to go ahead with the on-chain governance proposal despite the majority voting ‘No’ in the online poll.

On 16th May, Kwon proposed the hard fork that would split into two chains: Terra and Terra Classic. The new, non-classic chain would abandon the failing UST stablecoin and instead focus on decentralized finance (DeFi) applications building on Terra, as TronWeekly reported. 

Kwon posted a call to action as part of yesterday’s announcement: “We encourage Terra developers to signal support [and] commit to building on the fork on public channels,” he wrote.

Over a dozen validators voted in support of the fork of Terra that focuses on development rather than its stablecoin. However, results from the preliminary poll indicated that many community members were against the idea.

More than 90% of 6,921 voters on a previously held online poll have voted down the change, with the most popular responses calling for “no fork.”

Fork Or Burn. What Do Experts Say?

The most trending crypto hashtags called for burning LUNA as many in the community felt the token can be salvaged by buying up the circulating supply and then burning it down.

Leading fund managers were skeptical saying that Terra’s senior team would push for forking the blockchain irrespective of the community’s sentiment toward the project. Doo Wan Nam, founder of crypto fund Stable Node said,

“It’s a dilemma for Kwon and Terra’s team as they can technically override the community’s consensus by either forking regardless of the decision or using their staked Luna [to prevent the network from being manipulated] to change the voting to support.”

“This will be received very poorly by not only the Terra community but the wider crypto community. However, Do and his team might not have much choice but to do it to better reflect his vision of the Terra ecosystem,” Doo added.

On the other hand, Terra’s woes refuse to end as reports emerged of possible legal action by a South Korean law firm. LKB & Partners will reportedly file the case against Kwon, a Korean national, on behalf of ordinary investors to the Seoul Metropolitan Police Agency, according to a local news outlet.

Cryptocurrency fraud at an all-time high?

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Yet another cryptocurrency fraud has come to light. The US Department of Justice reported Friday, 6 May 2022, that Mining Capital Coin CEO and founder Luiz Capuci Jr. was charged with reportedly masterminding a $62 million global investment fraud scheme using his putative crypto mining and investment platform.

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Mining Capital Coin CEO and founder Luiz Capuci Jr.

However, after being charged with a slew of offenses including wire fraud, money laundering, and securities fraud, Capuci faces a maximum jail sentence of 45 years.

Capuci and co-conspirators are accused of defrauding investors of $62 million by the US authorities. Mining Capital Coin claimed to have invested in cryptocurrency mining and trading, but that was not the case. He reassured investors that the company had a large network of mining operations that could deliver consistent profits.

Capuci also pitched investors on the company’s trading bots, stating that they were created by leading programmers from around the world.

According to federal authorities, Mining Capital Coin was a regular pyramid scheme. The cash collected from investors was never invested in any of the aforementioned projects. Capuci, according to federal authorities, transferred the stolen monies to his bitcoin wallets without fulfilling the company’s pledges.

According to Kenneth Polite Jr., associate attorney general for the criminal division of the United States Department of Justice, unlawful cryptocurrency schemes damage the young industry, and the agency is dedicated to combating financial crime.

The art of scamming cryptocurrency or vulnerability of being scammed?

Lack of regulation, rapidity of transactions, irreversibility of trades, and disguised identities are all positive qualities of the crypto world, according to the hype. Crypto fanatics believe that bypassing banks, regulators, and rules is the only way to improve finance. When it comes to your assets, however, faster and looser isn’t necessarily better. It’s a surefire way to have your money stolen from you.

The CEO of an unnamed South Korean bitcoin exchange was arrested last week on suspicion of spying for North Korea. Satish Kumbhani, the co-founder of BitConnect, was indicted by a grand jury in late February on several charges.

Crypto is all about moving money rapidly. It’s also at the heart of any well-planned fraud scheme. Cryptocurrency can also be moved swiftly and washed to prevent notice once obtained.