Terraform Labs caught moving $4.8M through shell company

It appears that Do Kwon may be in for more legal trouble as allegations arise accusing him of further financial crimes.

FatManTerra, who seemingly never sleeps, has released information tying Do Kwon to a blockchain consultancy firm Kernel Labs. Money has allegedly been Korean news site also reported on the news stating,

“National Tax Service was caught by the fact that last year, Terra received a virtual currency worth about 6 billion won from Terra.”

Do Kwon was fined last year for tax evasion and ordered to pay 100 billion won ($80M) in taxes. The amount is expected to rise over time as only realized gains are taxed for cryptocurrency in South Korea. The new allegations suggest that this is not the only crime for which he is now being investigated. 

Terra’s legal woes

Given the increasing number of legal battles on the horizon for Terraform Labs and Do Kwon, it is even more disconcerting that the entire Terraform Labs’ legal team reportedly resigned in a mass walkout last week.

The latest allegations suggest that Terraform Labs’ sister company, Kernel Labs, received 6 billion won ($4.8 million) from Terraform Labs. While this could be a completely innocent transaction for consulting services, the recent actions of Do Kwon to remove any association of himself to Kernel Labs makes the transaction appear suspicious.

The Korean news outlet KBS used a pseudonym for Kernel Labs, calling it “company K. However, there are references to Kernel Labs several times alongside Terraform Labs, suggesting it is the company in question.

The official identity of the company, as reported by KBS, cannot be confirmed at this time, but Kernel Labs will be cited according to the allegations of our sources. Further, there is evidence linking Do Kwon to Kernel Labs through patents filed by the company. In addition, KBS reported the news in the following manner,

“This is a blockchain consulting firm K in Seongsu-dong, Seoul.
The office with the lab sign is full of computers.”

Company K and Do Kwon

It may be reasonable to assume that KBS was attempting to leak the name without saying it outright, “Consulting firm K…office with the lab sign.” Further, Do Kwon amended the original Luna Revival plan to remove reference to Kernel Labs in a highly suspicious move.

A section that identified roles and responsibilities for the new Luna blockchain contained a reference to “TFL/Kernel Labs” but has since been amended to remove the reference to “Kernel Labs.” Image 1 below is a cached version of the original proposal quoted in a user’s comment. Image 2 is the revised proposal as it currently reads.

According to KBS, Terra and Kernel Labs appeared indistinguishable to locals, reporting, “employees in a nearby office also say they looked like the same company as Terra.” KBS also reported that they attempted to speak directly with several members of Terraform Labs,

“all of whom declined to answer, saying, “Only a small number of people, including CEO Kwon Do-hyung, know the true nature of Terra and Luna.”

The fascination with the Terra collapse is likely to continue as more skeletons come out of the closet daily. The story is indeed not over, and CryptoSlate will be sure to keep you informed of all the latest developments.