Do Kwon, the embattled co-founder and CEO of Terraform Labs, may have placed Binance, the world’s largest crypto exchange platform by trading volume, in a tight spot as authorities asked the exchange to restrict the crypto executive and his partners from accessing or moving any cash or cash equivalent assets they have on its platform.
Terra’s collapse, triggered when its so-called algorithmic stablecoin TerraUSD (UST) and native token LUNA nosedived last May, started a chain of events that saw the cryptocurrency market experience a prolonged bear market.
The collapse wiped out approximately $40 billion in investments and bankrupted many investors who placed their life savings on the crypto assets believing that it could give them early retirement.
In the middle of the Terra storm is the outspoken and highly confident CEO Kwon, who aside from running Terraform Labs (TFL), the blockchain firm behind the controversial UST and LUNA assets, also co-founded it.
Following his arrest in Montenegro in March, both the U.S. and South Korea requested his extradition since he faces charges in both countries.
While Kwon is still detained in Montenegro and waiting for the court’s verdict on charges of possession of fake travel documents, South Korean prosecutors continue to ramp up their investigation on the CEO, its partners and Terraform Labs.
This led authorities to locate around 463 billion won or approximately over $345 million in funds that several other prosecutors deemed “unrecoverable” since these assets were believed to be converted into Bitcoin via multiple crypto exchange platforms.
One of these exchanges is Binance, which revealed last month that it has “provided Korean [law enforcement] authorities with the requested assistance.”
Evan Spicer, a director at forensic cryptocurrency investigations firm MyChargeBack, noted that Binance is currently in a tight spot and the best move it has left is to cooperate with South Korean authorities on issues related to Kwon’s alleged stolen funds.
“It would be in their interest to cooperate with South Korean prosecutors in light of major developments,” Spicer said in an interview with local media, underlining that Binance has a massive presence in South Korea and is currently under investigation in the United States.
“South Korea has gone on a crypto regulation frenzy and is undertaking a major crackdown. So if you’re somebody with a presence there like Binance, you’re going to want to cooperate,” the director said.
“Binance has really made an effort to move out of the U.S. as much as possible to try and protect itself. So it is not going to want to cross any of its other host countries the wrong way, especially not one that is close to the U.S. like South Korea,” Spicer added.
In early April, South Korean prosecutors reached out to Binance to ask for its help to prevent Kwon from accessing his funds.
A Binance representative confirmed this and noted that it responded to the request of the prosecutors, but it could not provide any more details because the issue was part of an ongoing investigation.
