Investors in the crypto market have been shaken by a spate of recent frauds, with two notable cases involving the founder of Terra, Do Kwon, and an ex-Deutsche Bank investment banker, Rashawn Russell.
In the case of Do Kwon, it is alleged that he was aware of Terra’s impending collapse in May 2022 and sent 9 billion Won ($7 million) to one of the top law firms in South Korea, Kim & Chang. This payment, made right before the Terra Luna collapse, has raised suspicions, with prosecutors and law enforcement authorities actively tracing the source of the money. The prosecutors believe that tying Kwon’s ill intent in paying the firm would help in the fraud case. Additionally, if the firm or Kwon cashed in crypto assets to pay the law firm, embezzlement charges may be filed.
In another case, Rashawn Russell, a former investment banker at Deutsche Bank, was accused by US authorities of running a Ponzi-like crypto scam. Russell allegedly defrauded investors by promising guaranteed returns from their investments in the crypto sector. The banker is said to have fabricated documents to dupe investors and lied about the state of their crypto investments.
Like a typical Ponzi scheme, Russell used funds from a few investors to repay others. He also encouraged victims to roll over their investments, carried forward an investment’s futures position, and inflated the bank balance of his accounts through falsified documents. Russell has pled not guilty to the charges and was released on a bail of $200,000. Deutsche Bank said it was “cooperating with authorized investigations and proceedings.”
These cases continue to raise concerns about the lack of regulation and oversight in the crypto market. Investors must exercise caution and do their due diligence before investing in any crypto asset. While the crypto market offers potentially high returns, it also carries significant risks, including fraud, market volatility, and security breaches.
As such, investors must stay vigilant and seek professional advice before investing in any crypto asset. In turn, regulators and law enforcement authorities must work to establish a more robust regulatory framework that protects investors and ensures the integrity of the market.
