The collapse of the Terra-Luna ecosystem led to the destruction of 60 billion USD in market value one year ago. While holders of the LUNA token suffered a total loss, the South Korean founder Do Kwon fled his domicile and transferred 100 million USD to a bank account, allegedly at the Swiss Sygnum Bank.
According to reports from the KoreaTimes, Terra founder Do Kwon transferred over 10,000 bitcoins (approximately 280 million USD) from his business empire to various wallets and accounts after the collapse of the UST ecosystem, with 100 million USD reportedly ending up at Sygnum Bank, according to the South Korean prosecutor's office. Most of the funds were then transferred to other accounts, with a certain amount going to the law firm Kim & Chang. There are still some millions of US dollars remaining in the Sygnum account ("about billions of won").
Prosecutor's office traces Kwon's assets to Switzerland
The US Securities and Exchange Commission (SEC) revealed back in February that Do Kwon and his company Terraform Labs had transferred a considerable sum of 10,000 bitcoins to a Swiss bank. This bank appears to have been the Sygnum Bank, according to a Korean source cited by the financial portal Finbold. The securities crime investigation department of the Seoul Southern District Prosecutor's Office apparently traced the trail of Do Kwon's funds back to Switzerland and located a specific bank account.
"We have also confirmed that $100 million has been used in several places, not left in the Sygnum account as it is, and some transfers have been made to the Kim & Chang law firm account (at the attorney’s expense) and the remaining amount is about billions of won." - Southern District of Seoul Prosecutor's Office
The prosecutor's office also announced that it had received requests from both South Korean and US law enforcement agencies to freeze Sygnum accounts. However, the situation is complicated, as both the Swiss government and the involved banks must decide whose request for freezing was made first. Sygnum Bank has not yet issued a statement, but according to Inside Paradeplatz, Kwon, who was arrested a month ago, has been a customer since 2021.
Algorithmic stablecoins: a failed experiment
Stablecoins have become an important pillar in the decentralized finance (DeFi) world in recent years, typically taking the form of dollar-denominated tokens. They are part of the most heavily traded cryptocurrency pairs and are considered a safe haven compared to volatile cryptocurrencies, as they are backed by fiat currencies. Generally, centralized companies manage these stablecoins and hold liquid financial instruments as reserves. In this form, stablecoins are comparable to traditional money market funds.
Algorithmic stablecoins, on the other hand, rely on an algorithm/protocol that acts as a central bank to maintain stability. Unlike fully collateralized or over-collateralized stablecoins, algorithmic stablecoins use their own protocol token for binding maintenance, whose pricing is independent of supply and demand. Theoretically, the mechanism can balance inflationary or deflationary tendencies through the minting and burning of protocol tokens. However, in practice, such models only work when there is a steady increase in demand and are highly vulnerable to disproportionate withdrawals by investors, as demonstrated by the tragic collapse of the Terra/Luna ecosystem.
