Crypto fugitive Do Kwon has been on the run from Interpol for months. A South Korean professor has been hard on his heels, tracking the Terraform Labs CEO’s every move.
“I’m really kind of obsessed with his addresses and on-chain data,” Jaewoo Cho, a blockchain expert and assistant professor at Hansung University in Seoul, told DL News. The experience has been “kind of [like] profiling. You’re getting to know him.”
Why track the South Korean co-founder of Singapore-based Terraform Labs for almost a year? “I just liked it… Doxxing is my hobby.”
Cho is not alone in wondering about Kwon’s whereabouts. Terraform is at the centre of a $60 billion crash, triggered by the collapse of its algorithmic stablecoin TerraUSD in May. The blow-up contributed to the downfall of hedge fund Three Arrows Capital, lender Voyager and exchange giant FTX.
NOW READ: Crypto fugitive Do Kwon plots comeback after $60bn Terra collapse
Kwon is a fugitive. Both South Korean and US authorities have charged him for his role in the alleged multi-billion fraud, and he is also wanted by Interpol. South Korean officials say Kwon is hiding in Serbia.
Kwon has denied that he is hiding from law enforcement.
Cho said he predicted Terraform Labs’ collapse back in April 2019, when he first heard about the company. That was when he looked into the firm on behalf of venture capital investors. Not only was he shocked by the size of the project, but he also identified several structural weaknesses at the time.
Cho claimed he pointed out risks to Terraform labs, like black-swan events which are rare but potentially catastrophic when they do occur. “They just let it be. They ignored it.”
The algorithm in “algorithmic stablecoin” was supposed to maintain TerraUSD’s parity with the dollar by letting people trade it for Terra’s native cryptocurrency, LUNA, for a profit. The system relied on arbitrage traders to keep the show running. But when the trust faded, both tokens went into a death spiral.
When TerraUSD collapsed in May 2022, a South Korean journalist approached Cho, wanting to use his blockchain expertise to verify some information. The reporter wanted Cho to look into Terraform Labs’ on-chain activity, especially those around its Project Dawn funding initiative that started in September 2021 and ended in April 2022.
Cho agreed, but when he fired up his computer to look at the blockchain he was taken aback. “I was really surprised by the size of the scam. It’s not a million – it’s about billions of dollars,” he said.
“Do Kwon is very arrogant... He’s like, ‘Okay, I’m doing that, and catch me if you can.’”— Jaewoo Cho
The SEC charged Kwon and his Terraform Labs in February, saying they orchestrated a “crypto asset securities fraud” that reached $40 billion between April 2018 and May 2022.
Cho has since continued identifying Terraform and Kwon’s wallet addresses and tracking their transactions – that has not gone unnoticed by Kwon himself.
In one Twitter exchange the same month as the Luna crash, Cho posted a critique of Terra’s comeback attempt known as Terra 2.0.
“Cheers, fud harder,” Kwon replied, using the crypto acronym that stands for “fear, uncertainty, and doubt”.
“Do Kwon is very arrogant,” Cho said. “He’s like, ‘Okay, I’m doing that, and catch me if you can.’”
Terraform Labs and Kwon did not respond to requests for comment.
Its in the governance proposal that launched the new network, which you obviously didn’t read— Do Kwon 🌕 (@stablekwon) May 29, 2022
Cheers, fud harder pic.twitter.com/YqZrE3gyjz
Once the cryptocurrency is sent to crypto exchanges it is no longer on-chain. “That’s truly the end of the road, and that’s the opportunity for government authorities and exchanges,” Cho said.
His findings were posted on Twitter by FatManTerra, an account well known for sharing insider tips tracking Terra’s demise in September, with a spreadsheet of the data Cho had collected.
DL News did not independently verify the findings.
Kwon in February of this year wrote on Twitter, “I’ve stolen no money and never had ‘secret cashouts’ – happy to address specific allegations.”
.@clayop tallied up the numbers - TFL sent a total of $3.9 billion USD (in UST) to exchanges including Binance and KuCoin.— FatMan (@FatManTerra) September 9, 2022
Let the enormity of that figure sink in, and consider how many people's savings that is added up. Crypto's biggest fraud.
No explanation from @stablekwon https://t.co/qc2kCFPMHW
Cho said he has noted a shift in Kwon’s transaction habits in the past few months.
Until recently, Cho said that the fugitive crypto boss used the same old addresses to transfer money to and from different addresses and exchanges. Now, he said, Kwon may have started to use other addresses to move his money, seemingly over-the-counter or via brokers. “I suspect there are some friends or some brokers who are helping Kwon withdraw his money,” Cho said.
The SEC said that Do Kwon transferred more than 10,000 Bitcoin from Terraform and Luna Foundation Guard – another entity from Terra ecosystem – accounts to an unhosted wallet or so-called cold wallet, which was then transferred to a Swiss bank and converted to cash. Between June 2022 and February 2023, more than $100 million in fiat currency has been withdrawn from the Swiss bank, the complaint said.
Kwon is now staging a comeback. Over the past few months, Terraform Labs has hired more engineers to launch new projects, including a new blockchain that kept the old Terra name.
Cho is not optimistic about Kwon’s return to the industry, and doubts the success of the Terra 2.0 project, labelling it as “totally absurd.”
Having spent so much time following and analysing the moves of the elusive Terraform CEO, Cho said he feels like he knows Kwon. He laughed. “If I meet with him, I will hug him.”