South Korean professor tracking Do Kwon’s funds: Signs of Terra’s collapse were present in early 2019

Prof. from S. Korea tracking Do Kwon's funds: Terra's collapse signs were seen in early 2019.

Do Kwon, a crypto fugitive, has been evading Interpol for months. A South Korean professor has been tracking the movements of the Terraform Labs CEO. “I’m really obsessed with his address and on-chain data,” said Jaewoo Cho, a blockchain expert and assistant professor at Seoul Hannam University, in an interview with DL News. “It’s like drawing a portrait. You get to know him.”

Why has this co-founder of Terraform Labs in Singapore been tracked for nearly a year? “Just for fun… doxxing is my hobby.” Jaewoo Cho is not the only one interested in Kwon’s whereabouts. Terraform was at the center of a $60 billion crash in May following the collapse of its algorithmic stablecoin TerraUSD. The crash also led to the downfall of hedge fund Three Arrows Capital, lending firm Voyager and exchange giant FTX.

Do Kwon is a fugitive. He is indicted by both Korean and American authorities for his role in what is known as a multi-billion dollar fraud case, and is also wanted by Interpol. Korean officials say Kwon is hiding in Serbia. Kwon denies he is evading law enforcement.

Cho said he predicted Terraform Labs would collapse in April 2019 when he first heard about the company. He was investigating the company on behalf of venture capitalists. Not only was he shocked by the scale of the project, he also found several structural weaknesses at the time. Cho claims he pointed out some of the risks to Terraform Labs, such as black swan events, which are extremely rare but can be catastrophic when they occur. “They just let it happen. They ignored those issues.”

The algorithm in “algorithmic stablecoins” was supposed to maintain the peg between TerraUSD and the dollar by allowing people to profit by trading it for Terra’s native cryptocurrency LUNA. The system relied on arbitrage traders to keep it going. But when trust disappeared, both tokens spiraled to their deaths.

When TerraUSD crashed in May 2022, a Korean journalist approached Cho to verify some information using his blockchain expertise. The journalist wanted Cho to investigate the on-chain activities of Terraform Labs, particularly around its Project Dawn fundraising plan that began in September 2021 and ended in April 2022. Cho agreed, but when he opened his computer to look at the blockchain, he was shocked. “I was really surprised at the scale of the fraud. It wasn’t a million—it was about tens of billions of dollars,” he said.

In February, the SEC charged Kwon and his Terraform Labs with orchestrating a “cryptocurrency securities fraud” that involved $40 billion from April 2018 to May 2022. Since then, Cho has continued to identify Terraform and Kwon’s wallet addresses and track their transactions, which Kwon himself has not ignored.

In a Twitter interaction in the same month as Luna’s crash, Cho criticized Terra’s comeback attempt (Terra 2.0). “Cheers, keep spreading the FUD,” Kwon replied, using the cryptocurrency acronym for “fear, uncertainty, and doubt.”

“Do Kwon is very arrogant,” Cho said. “He’s like, ‘Okay, I’m doing that, catch me if you can.’ ” Terraform Labs and Kwon did not respond to requests for comment.

Once cryptocurrency is sent to a crypto exchange, it is no longer on the chain. “This is really the end of the road, this is the government’s and the exchange’s chance,” Cho said. His findings were posted on Twitter by FatManTerra, an account known for sharing insider information on Terra’s September death, along with a spreadsheet of data collected by Cho. DL News did not independently verify the investigation’s results.

In February of this year, Kwon wrote on Twitter, “I have never stolen money, nor have I ever had a ‘secret withdrawal’ – I welcome discussions on specific accusations.”

Cho said he noticed changes in Kwon’s transaction habits over the past few months. Before that, the fugitive was still using the same old address to transfer money to and from different addresses and exchanges. Now Kwon may have started using other addresses to move his money, which looks like over-the-counter transactions or through brokers. “I suspect there are some friends or brokers helping Kwon withdraw his money,” Cho said.

The SEC alleges that Do Kwon transferred more than 10,000 bitcoins from accounts at Terraform and the Luna Foundation Guard, another entity from the Terra ecosystem, to an unhosted wallet, or so-called cold wallet, and then transferred these funds to a Swiss bank and exchanged them for cash. The complaint alleges that more than $100 million in fiat currency was withdrawn from the Swiss bank from June 2022 to February 2023.

Kwon is currently planning his comeback. Terraform Labs has hired more engineers in recent months to launch new projects, including a new blockchain with the old Terra name. Cho is not optimistic about Kwon’s return and expresses doubts about the success of the Terra 2.0 project, calling it “completely absurd.”

After spending a lot of time tracking and analyzing the elusive Terraform CEO’s movements, Cho says he feels like he understands Kwon. He laughs, “If I see him, I’ll give him a hug.”

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Latest Developments in the Do Kwon Case

On June 16, a Montenegrin court ordered Do Kwon and Han Chang-Joon to remain in custody for another six months as the judge considers extradition requests from South Korean and American authorities. Do Kwon was arrested in Montenegro on March 24 on suspicion of falsifying documents, as he was planning to board a flight to Dubai.

Previously, the Korean press reported that Do Kwon had refused US jurisdiction during his time on the run. Some believe that Do Kwon’s refusal of US jurisdiction may have been due to a desire to reduce the severity of any future punishment. The US currently uses a sentencing system that adds up the individual penalties for each crime, with a maximum sentence of over 100 years, and the SEC and local prosecutors have already made a preliminary determination that virtual assets are securities. South Korea, meanwhile, has a maximum sentence of only about 40 years, and there is no standard or legal framework for determining whether virtual currency constitutes a security, making the situation different from that in the US.

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