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South Korea Seeks to Freeze $62 Million of Bitcoin Linked to Fugitive Crypto Founder Do Kwon

South Korean authorities have asked two cryptocurrency exchanges to freeze more than $60 million worth of bitcoin linked to Do Kwon, the founder of the company behind two now-collapsed digital coins. This comes after the collapse of the company's two digital coins, which have left many investors stranded.

September 28, 2022
6 minutes
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South Korean authorities have asked two cryptocurrency exchanges to freeze more than $60 million worth of bitcoin linked to Do Kwon, the founder of the company behind two now-collapsed digital coins. This comes after the collapse of the company's two digital coins, which have left many investors stranded.

The Seoul Southern District prosecutors office said they have put in a request to crypto exchanges OKX and KuCoin to freeze some 3,313 bitcoin tied to Kwon. If the request is approved, those bitcoin will be worth around $62 million at Wednesday's price.

Kwon is the founder of Terraform Labs, the company behind the algorithmic stablecoin terraUSD or UST and its sister token luna. Terraform Labs is dedicated to providing a stable and secure digital currency for global use. With terraUSD, users can transact with confidence knowing that the value of their currency is backed by real assets.

The value of these coins collapsed from around $60 billion to nearly nothing in May, causing a major shock to the crypto industry.

South Korean authorities have issued a Red Notice for Kwon through Interpol, claiming that he is on the run. Red Notices are issued for fugitives wanted either for prosecution or to serve a sentence.

Kwon insists that he is not on the run, and said on Tuesday that he is "making zero effort to hide." The crypto founder claims that he goes on walks and is in his living room coding.

The Seoul Southern District prosecutors office declined to comment on how they identified that the bitcoin is linked to Kwon. However, it is likely that they used some form of digital forensics to trace the cryptocurrency back to him. This is a common practice when investigating cases involving Bitcoin and other digital assets.

According to analytics platform CryptoQuant, the Luna Foundation Guard (LFG) set up a digital wallet on September 15 and sent 3,310 bitcoin to KuCoin and OKX. The LFG is a non-profit organization dedicated to promoting the blockchain Terra, created by Kwon's company Terraform Labs. This latest move suggests that the Foundation is preparing to make a significant investment in the KuCoin and OKX exchanges.

The LFG has responded to claims that it has been moving bitcoin or other digital currencies around, saying that it has not created any new wallets since May 2022. The organization posted its wallet address on Twitter to prove that it is not involved in any illegal activity.

However, CryptoQuant replied that the wallet address in question is the public one, suggesting that the Luna Foundation Guard has another, private wallet address that is not explicitly linked to the nonprofit. Kwon also refuted the claims that bitcoin was moved. He said on Twitter that there was no attempt to "cash out" and that he hasn't used KuCoin or OKX in "at least the last year." He added that no funds of Terraform Labs, LFG or other entities have been frozen.

KuCoin has stated that it is willing to cooperate with any global law enforcement agencies in cases where there is an investigation into the origins of assets or freezing of assets. This was announced by the company in response to questions from CNBC.

The article noted that in relation to Kwon and the request by South Korean prosecutors to freeze funds linked to the crypto founder, "it would be helpful if you could first address the issue to any related authorities and clarify their stance."

CNBC contacted KuCoin regarding the situation. KuCoin responded that they are unable to disclose any details in order to not interfere with the case.
OKX has not yet responded to a request for comment. We will update this article as soon as we receive a response.

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