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Terra Conspiracy Gets Complicated: Prosecutors Uncover a Secret Subsidiary Used as a Funding Channel

Terra Conspiracy Gets Complicated: Prosecutors Uncover a Secret Subsidiary Used as a Funding Channel

The ongoing investigation of the Terra crash reportedly took a new turn when authorities connected a new crypto entity called “Flexe” to Terra and Do Kwon, according to local Korean media outlet KBS News.

The Terra Secret subsidiary belongs to Do Kwon

The Terra debacle doesn’t seem to be over. 1 South Korean prosecutors have uncovered a subsidiary of Terraform Labs, according to KBS News. Prosecutors say the company, known as FLEXE Corporation, facilitated the transfer of money from abroad to Terra associates. South Korean authorities began investigating the matter in May, following the widely reported collapse of Terraform Labs.

Kwon Do-hyung, also known as Do Kwon, CEO of Terraform Labs, is the sole inside director of FLEXE Corporation, according to KBS. The so-called society would only exist on paper.

A search on Naver, the South Korean equivalent of Google, seems to suggest that a company by the name of FLEXE Corporation is based in the Seocho district of Seoul, in the same building as a company that helped finance the founding of Terraform.

BTC/USD is trading above $20,000. Source: Trade View

A reporter from KBS visited the location of FLEXE Corporation’s headquarters. However, the reporter was informed that such a company was not in the structure. According to a building manager who spoke with the reporter, they had never heard of FLEXE Corporation and were unable to uncover any evidence that the company had ever rented space in the building.

Authorities say they traced cash flows from Terra’s Singapore base totaling 6 billion Korean won (about $4.5 million) and 12 billion won (about $9 million). The funds were then funneled to Terra’s office in the British Virgin Islands before reaching FLEXE in South Korea and other Terra affiliates.

According to KBS, the company acted as an intermediary for the money obtained through cryptocurrency settlements.

There are rumors that Flexe trades cryptocurrencies that are rarely published on cryptocurrency exchanges. Flexe Corporation’s cash inflows were reportedly an issue during a special tax investigation by the National Revenue Service last year, according to a former Terra developer.

Local media reports as early as February show that Terraform Labs was not actively trying to hide FLEXE’s existence.

Related article | Terra: A ‘Pyramid Scheme’ Threatens Crypto Ecosystem, Billionaire Says

Do Kwon in Endless Misfortunes

Since the TERRA/LUNA disaster, the entire cryptocurrency industry has changed, and the cryptocurrency community has not recovered from the historic event and is unlikely to do so any time soon considering the persistent accusations of conspiracy.

South Korean stock markets are eager to disassociate themselves from the “LUNAC/Terra incident,” as lawmakers have called it.

Recent months have drawn attention to listing and delisting regulations, with many criticizing the failure of exchanges to delist LUNAC in a coordinated manner. After the May price crash, some exchanges removed the token from their listings, while others allowed traders to continue using it for several weeks until LUNAC support officially ends in June.

According to Yonhap, the Korea Digital Asset Providers Association, a group made up of a few small local cryptocurrency exchanges, has proposed creating an industry-wide “crypto asset review board.” This committee would be in charge of choosing the currencies that could be added and withdrawn from national exchanges.

The proposed committee would also be responsible for “compliance monitoring”, assessing the “durability” of the coins and the “level of communication with investors”.

The proposal also outlines procedures for monitoring dishonest trading practices, such as insider trading and market manipulation.

Related Reading | Terra Loses More Shape: Do Kwon Faces Tax Evasion Charges; Law firm sues to seize property

Featured image from iStock Photo, chart from TradingView.com

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