Do Kwon, founder of Terraform Labs, will lose his passport in less than a week. Interpol issued a red alert for Kwon last month and his assets were reportedly frozen this month by the South Korean government.
Kwon has been responding to the reports by tweeting freely — almost always denials. He wrote one message, “I don’t know who their funds have frozen, but good on them, hope that they use it for good.” Kwon appears to be enjoying a life of freedom and internet access while playing cat and mouse with the authorities.
The United States Securities and Exchange Commission has been vocal in reprimanding Kim Kardashian and others for supporting various cryptocurrency projects. They deserve to be rebuked but bad actors such as Kwon continue their escape from the regulatory arm.
Kim Kardashian is just the tip of the crypto iceberg
After promoting EthereumMax (EMAX), Kardashian promised the SEC that she would pay a $1.26 million settlement. The reality star was wrongly penalized for failing to disclose $250,000 she was paid to promote the shitcoin. It plummeted 98% within a few hours of her endorsement. She disclosed she was paid, but did not disclose the exact amount.
Gary Gensler, Chairman of the SEC, stated that following the court decision, he had declared that “this case is a reminder” that celebrities and influencers can endorse investment opportunities (including crypto-asset security) but that it does not mean that they are necessarily right for all investors. He also said that the case had “remind celebrities and other people that the law requires them disclose to the public how much and when they were paid to promote securities investing.”
Related: Kim Kardashian’s Ethereum Max advertisement violated the SEC’s anti-touting provision
These are fine words. Gensler’s extravagant wrist-slapping with celebrities is an example of style over substance. Although clear pump-and dump schemes should not be ignored, the priorities of regulatory agencies are clearly distorted. The SEC should be pursuing far more fish in the crypto pond.
Do Kwon’s damage
Kardashian claiming that EMAX is not a good look for crypto was a mistake, and the SEC was correct to accuse her. It’s still not enough to compensate for the harm done by Kwon which the SEC was unable to prevent. Over the course of a week, roughly $50 billion worth of market value was lost due to the May collapse of Terraform’s stablecoin, LUNA. LUNA was among the 10 most popular cryptocurrencies on the market before its crash.
In 2021, the SEC issued Kwon’s first subpoena. Kwon, always the anti-authoritarian, replied that he would not comply with the demands and would sue the SEC. His countersuit was unsuccessful, but it showed his disrespect for the agency.
Related: Federal regulators prepare to rule on Ethereum
It seems that the SEC has lost touch with Kwon. Interpol issued a red notice to Kwon in South Korea, not the United States. This official order was sent to law enforcement around the world to locate and arrest the wanted individual.
The SEC seems to have given the blame to Interpol and South Korea. The agency instead is pursuing Ripple, Coinbase and other digital assets despite the fact that U.S. legislators have not yet defined them.
Kwon does more than just cause damage. It can even cost victims their lives in some cases.
In these turbulent times for global markets, the last thing we need is uncertainty caused by shady or (allegedly) criminal agents. Kwon has requested regulation from authorities. Perhaps that’s why the SEC has been slow in following South Korea’s lead and issuing a strong rebuke.
While proper regulations are not necessarily bad, it is difficult to determine what “proper,” before regulators enforce the laws already in place.
Zac Colbert works as a digital marketer and freelance writer. Since 2007, he has been covering digital culture.
This article is intended for informational purposes only and is not meant to be or should be interpreted as investment advice. These views, thoughts and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.