Terra website hijacked by phisher

Despite the catastrophic Terra/Luna collapse in May 2022, the Terra blockchain is still up and running. On August 19, the official Twitter account for the Terra project tweeted that the project's website had been hijacked, and was being used by a phisher to try to obtain access to users' wallets. When the website is opened, it prompts visitors to connect their wallets, which then allows the phishers to drain funds.

Despite a tweet on August 19 that "sites are coming back online", and a developer stating that they were "mostly back in control", the website apparently remained compromised for several days. The project reiterated via tweet on August 20 that the website was still not safe to use.

It's unclear how much was stolen as a result of the hijacking.

Former Fabric CFO accused of siphoning $35 million into his crypto startup and losing it all

Black and white headshot of Nevin ShettyNevin Shetty (attribution)
Nevin Shetty, the former chief financial officer of the Fabric e-commerce platform, was federally indicted for wire fraud after allegedly misappropriating $35 million from Fabric to put into his cryptocurrency platform HighTower. Shetty stole the money in April 2022, shortly after being told he would be fired from Fabric for performance reasons.

According to the grand jury indictment, Shetty planned to put the funds into cryptocurrency positions that "could have yielded returns of 20 percent or more annually", and planned to return 6% to Fabric, keeping the difference. This so-called "investment" contradicted the conservative investment strategy that Shetty had helped to draft for Fabric, and he concealed both the existence of the transfer and his involvement with HighTower.

Shetty "lost virtually all of [Fabric's] money" "within a matter of weeks", at which point he fessed up to Fabric. Shetty had placed all of the funds into protocols based around the Terra stablecoin, which collapsed dramatically only a month later.

Shetty has pled not guilty, and has been released on bond.

Terraport Finance hacked for $2 million less than two weeks after launch

Terraport Finance is a defi project built on, believe it or not, the Terra blockchain. Yes, the same Terra blockchain on which the Terra/Luna projects were built. Despite the massive collapse of the flagship project in May 2022, there are still a number of Terra projects operating, and even some new projects being developed.

Terraport Finance launched on March 31, apparently having gone live without any sort of audit. On April 10, Terraport disclosed that an attacker had apparently managed to drain all project liquidity pools, making off with assets priced at around $2 million.

US prosecutors file criminal charges against Do Kwon

Only hours after Do Kwon was arrested in Montenegro, federal prosecutors in New York filed eight criminal charges against him: conspiracy to defraud, conspiracy to defraud and engage in market manipulation, and two counts each of commodities fraud, securities fraud, and wire fraud. Prosecutors accuse Kwon of defrauding people by selling LUNA and UST (Terra) based on false claims about the technology, degree of adoption, and effectiveness of the algorithm intended to maintain Terra's stability.

The criminal charges out of the US add to civil charges he's facing from the SEC, as well as an investigation out of South Korea.

SEC files fraud charges against fugitive Terra/Luna CEO, Do Kwon

The U.S. Securities and Exchange Commission filed charges against Terraform Labs and its CEO, Do Kwon, relating to the May 2022 collapse of the Terra/Luna projects. The complaint accuses Terraform and Kwon of offering unregistered securities and of fraud, and the SEC wrote in a press release that Kwon and the company "orchestrat[ed] a multi-billion dollar crypto asset securities fraud".

According to the SEC, Kwon "repeatedly misled and deceived investors" about the characteristics and stability of Terra and Luna, and tricked investors into believing that a popular Korean mobile payments platform used the Terra blockchain.

Kwon has been on the run from the law since Korean authorities filed a warrant for his arrest in September 2022. An Interpol red notice followed soon after. He is reportedly hiding out in Serbia, and Korean authorities reportedly traveled there in early February to hunt for him.

South Korean authorities issue arrest warrant to CEO of Tmon e-commerce platform for shilling Terra

South Korean authorities have issued an arrest warrant for the former CEO of Tmon, a major Korean e-commerce platform. The allege that he was bribed with Luna tokens, which he exchanged for billions of won (worth around US$105 million), to promote Terra: the stablecoin in the Terra/Luna ecosystem.

Terra and Luna dramatically collapsed in May 2022, and South Korean authorities are still hunting for Terra leader Do Kwon, who is reportedly hiding in Serbia. Earlier this month, Korean authorities reportedly traveled to Serbia to try to locate him, but were unsuccessful.

South Korea reportedly freezes $39.6 million in crypto belonging to Terra founder Do Kwon, Kwon says it isn't his

South Korean prosecutors have reportedly frozen $39.6 million in crypto assets belonging to Do Kwon, the founder of Terraform Labs and creator of the failed Terra blockchain project. South Korea had also previously issued a warrant for his arrest.

Kwon claims that the report is a "falsehood", and "I don't know whose funds they've frozen". This joins his other claims, such as that he is "not 'on the run' or anything similar" (he is), and that Interpol didn't issue a red notice for him (they have).

South Korea issues arrest warrant for Terra founder Do Kwon

A South Korean court has issued a warrant for the arrest of Do Kwon, the founder of the Terra ecosystem, as well as five other people. According to Bloomberg the allegations include violations of Korea's capital markets law.

Kwon and the others named in the warrant are currently in Singapore. In June, Korea banned current and former Terraform Labs employees from leaving the country, and in July Korean authorities raided multiple exchanges in connection to their investigation.

Hodlnaut seems to have lied about their Terra exposure

When Terra was collapsing in May, concerned users of the Hodlnaut lending platform asked whether the firm was exposed. CEO JT wrote on Twitter, "Hodlnaut as a firm did not take any losses on UST, users who held/bought UST on our platform did". Their social media manager wrote, "[Holdnaut] had 0 company exposure to [Anchor Protocol]", referring to the Terra-based lending protocol.

However, documents from the legal proceedings surrounding the now-underwater firm revealed that Hodlnaut had 317 million UST, which it liquidated at a loss when the previously dollar-pegged UST hit $0.85. In the filing, they wrote, "Due to the market's lack of liquidity, the average exit price of UST to USDC was around 42 cents on the dollar, resulting in realized losses to Hodlnaut Trading Ltd of about USD 189.7M. As a result, Hodlnaut's total debt to depositors of USD 500M became backed by realisable assets of around USD 315M as of 13 May 2022 due to the de-pegging event."

Korean authorities raid seven cryptocurrency exchanges in relation to Terra investigation

Korean police cars parked outside an office building at nighttime. A lit "Upbit" sign is visible.Korean police executing one of the raids (attribution)
Prosecutors working on the fraud case around the May Terra/Luna collapse raided seven cryptocurrency exchanges in South Korea including Bithumb, Upbit, and Coinone. They also raided eight other offices and residences in connection to the investigation. The investigators are reportedly looking for evidence to determine whether Terra founder and CEO Do Kwon may have intentionally spurred the collapse of the ecosystem.

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