Do Kwon converted stolen funds from Luna to Bitcoin: S.Korean prosecutors

South Korean prosecutors have identified 414.5 billion won ($314.2 million) in illicit assets associated with Terraform Labs co-founder Do Kwon and his associates. Out of the $314 million identified illicit assets, prosecutors have linked about 91.4 billion won ($69 million) of the specified amount to Kwon.

Although Kwon amassed millions, none of the assets tied to him is recoverable or under the jurisdiction of the S.Korean authorities. This is primarily because the now-arrested former CEO reportedly converted most of the stolen funds into Bitcoin (BTC) using overseas crypto exchanges instead of investing in physical assets, as per a report published in the South Korean daily KBS.

The South Korean authorities have requested Binance to halt any withdrawal request associated with Kwon. Binance confirmed to Cointelegraph that they indeed are cooperating with the prosecutors and offering any assistance they need. 

"We provided Korean LE authorities with the requested assistance. Since we cannont comment ongoing LE investigations, for any further comment please reach out to the prosecutors."

South Korean prosecutors are actively tracing properties associated with Terraform Labs executives in order to recover some of the illicit funds stolen from the Terra-Luna debacle. On April 3 prosecutors seized homes and other assets in an effort to stop former Terra employees from selling things that might be tied to legal cases.

In addition to the residences in Seoul owned by former CEO Shin Hyun-seong and others, the prosecutors also filed foreclosure actions against their foreign-registered vehicles, lands in Hwaseong and Gapyeong in Gyeonggi-do, and Taean in South Chungcheong Province.

Related: Do Kwon faces fraud charges from US prosecutors hours after arrest

Terra Luna was a booming crypto ecosystem based on the algorithmic stablecoin Terra-USD classic (USTC). However, the stablecoin depegged in May 2022, leading to a collapse of the $40 billion ecosystem within days.

What was initially thought to be a market-triggered event turned out to be a clear case of fraud, with former CEO Kwon at the center of it. According to on-chain data, In the 3 weeks leading up to the depeg, one entity dumped over $450 million of USTC on the open market. 4 days after their last sale, USTC started collapsing. And the entity behind the massive dump was none other than Terraform Labs.

TFL has been perpetrating the narrative that UST was "attacked". This is a false flag. In reality, TFL themselves weakened the Curve pool by irresponsibly dumping a massive amount of UST in a short timeframe. This reduced liquidity and severely weakened the peg.

— FatMan (@FatManTerra) December 6, 2022

Despite an arrest warrant from South Korean authorities and an Interpol red notice against his name, Kwon continued to evade arrest for nearly a year before getting caught on March 23 in Montenegro.