Do Kwon Refutes Claims of $40M in Frozen Crypto

Controversial crypto figure Do Kwon pushed back against reports Wednesday claiming prosecutors in South Korea had frozen tens of millions of dollars in crypto belonging to him.

Local media have placed the latest freeze at roughly 56.2 billion won ($39.9 million) in various digital assets including bitcoin, based on estimates from the Seoul Southern District Prosecutors’ Joint Financial Securities Crime Investigation Team.

Kwon has labeled the news as “muscle flexing.” The CEO’s exact whereabouts are currently unknown, and an Interpol red notice has been issued requesting his arrest. 

He has maintained he is not in hiding and has also rebuffed Interpol claims, noting he can be found coding in his living room — wherever that may be. 

The latest back-and-forth between local authorities and Kwon follows reports last month that South Korean authorities had requested local crypto exchanges OKX (previously known as OKEx) and KuCoin freeze a total of 3,313 bitcoin ($67.3 million) allegedly belonging to the CEO, a day after the red notice was issued.

“Once again, I don’t even use Kucoin and OkEx, have no time to trade, no funds have been frozen,” the CEO said in his tweet on Wednesday. I don’t know whose funds they’ve frozen, but good for them, hope they use it for good.”

Kwon took the opportunity to cast aspersions on the current political party in power in Seoul, implying they were responsible for jailing opposing politicians.

“It’s no surprise that crypto is most popular in countries that weaponize state institutions against their own people for political gain. Reap what you sow — revolutions start from within,” he tweeted.

The CEO, whose failed stablecoin project has been blamed for crypto’s recent turmoils and $40 billion in losses, is also wanted by local police along with former employees.

In September, a court issued the Seoul Southern District Prosecutor’s Office six arrest warrants for former employees, including Kwon and financial officer Han Mo, alleging they had breached securities and capital markets law.

On-chain analysis aligns with prosecutors’ allegations

Bitcoin transactions are pseudonymous, but the immutable record of the blockchain makes funds easy to trace.

On-chain analysis conducted by OXT Research appears to confirm the link between the frozen exchange assets and the Luna Foundation Guard (LFG), set up by Do Kwon ostensibly to defend the UST peg.

The LFG pointed to a wallet address controlling 313 BTC, in a Sept. 28 tweet, asserting that “LFG hasn’t created any new wallets or moved $BTC or other tokens held by LFG since May 2022.”

OXT Research disputes that.

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The “trail of bread crumbs” links the funding of the LFG’s publicly declared walled with a massive stash of bitcoins on the two exchanges.

“Since September 15, this sequence has distributed about $65mm worth of BTC as of the date of the respective deposits to Kucoin and OkEx,” OXT Research said on Twitter, adding, “My quick estimate of $65mm roughly corresponds with the values quoted in the Korean press last week.”

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If Do Kwon’s claims are true, and the Kucoin- and OKX-held assets are not connected to the LFG, then the question remains: Whose bitcoins were frozen?

Macauley Peterson contributed reporting.

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