Serbia

FBI, NY authorities probes collapse of TerraUSD stablecoin: Report

The controversial founder of Terraform Labs, Do Kwon, is at the center of the investigation, despite being believed to be hiding out in Serbia.

The United States Justice Department is reportedly investigating the collapse of the TerraClassicUSD (USTC) stablecoin, which contributed to a $40 billion wipeout in the Terra ecosystem last May.

Two agencies within the department — the Federal Bureau of Investigation and the U.S. Attorney’s Office for the Southern District of New York — have interrogated former staff at Terraform Labs in recent weeks, according to a March 13 The Wall Street Journal report.

The probe covers similar ground to a lawsuit filed against Terraform Labs and its founder Do Kwon by the U.S. Securities Exchange Commission on Feb. 16, according to people familiar with the matter.

Among topics that investigators have asked about was the relationship between Chai, a South Korean-based payment platform, and the Terra blockchain on which USTC operated.

The SEC alleged in its filing alleged that Kwon misled investors into believing that Chai transactions were processed on the Terra blockchain.

Do Kwon speaking at a conference about Terra before LUNC and USTC collapsed. Source: Terra

The SEC in its lawsuit also accused Kwon of misleading investors about the risks of the algorithmic-based stablecoin, which is designed to be pegged 1:1 to the U.S. dollar.

It is unclear what specific charges the Justice Department is potentially pursuing. The investigation does not necessarily mean that charges will be filed. 

Related: Do Kwon had the right idea, banks are risk to fiat-backed stablecoins — CZ

Since the collapse, Kwon reportedly left South Korea for Singapore, Dubai, and now Serbia, where he is now believed to be, according to South Korean officials. Two South Korean authorities were recently sent to Serbia to find Kwon but were unsuccessful in their search attempts.

Kwon, however, claims he is not “on the run” despite the South Korean prosecutors issuing Kwon an arrest warrant on Sept. 14 and a red notice filed by Interpol, the global law enforcement agency, on Sept. 26.

Kwon told podcaster Laura Shin in October that he hasn’t seen a copy of the South Korean arrest warrant, and has continued to deny fraud allegations on social media.

Meanwhile, New York prosecutors are understood to be investigating a series of chat-group investigations from former members at Jump Trading, Jane Street and Alameda Research, Bloomberg reported on March 13. Alameda filed for bankruptcy alongside FTX in November.

The investigation is reportedly looking into whether market manipulation tactics were involved in the TerraUSD stablecoin project.

Cointelegraph reached out to Terraform Labs but did not receive an immediate response.

South Korean officials traveled to Serbia to find Do Kwon

South Korean authorities have previously requested cooperation from the Serbian government to bring Kwon back.

The hunt for the controversial founder of the now-collapsed Terra ecosystem, Do Kwon, has intensified with South Korean officials reportedly confirming they sent at least two people to Serbia to track him down.

According to a Feb. 7 Bloomberg report, the prosecutor’s office in Seoul said the reports “aren’t false” regarding members of its team trekking out to the Balkan state to find Kwon.

It appears at least two state officials went — one from the prosecutor’s office and the otherfrom South Korea’s Justice Ministry.

Do Kwon speaking at a conference about Terra before the ecosys. Source: Terra.

South Korean-based publication Chosun Media reported on Dec. 11 that a state intelligence official informed them that Kwon had based himself in Serbia.

There is currently no extradition treaty between South Korea and Serbia.

This likely made Serbia a great hideout spot for Kwon, according to a recent opinion article from Minso Kim, a writer for the South Korean publication Chosun Media.

South Korea has however stripped Kwon of his passport, which may make future travel more difficult.

Kwon has been accused of being on the run since Sept. 14, when South Korean prosecutors issued an arrest warrant against him, an accusation that he denied in October.

The 31-year-old fallen entrepreneur has also been accused of breaching capital markets laws.

While Kwon is known to be a prolific tweeter, he went nearly two months without tweeting or retweeting a single post — causing some to speculate what the controversial figure has been up to.

But Kwon recently responded to an evocative tweet targeted at him, stating that he hasn’t stolen any money and has never had any “secret cashouts.”

To date, Kwon denies any wrongdoing.

Related: Terraform Labs claims case against Do Kwon is ‘highly politicized’: WSJ

The collapse of the Terra ecosystem was in part triggered by the de-peg of its TerraClassicUSD (USTC) algorithmic stablecoin, UST. Terra Classic (LUNC) was closely linked to the stablecoin, with that too falling close to 100%.

Approximately $60 billion worth of value was wiped out of the ecosystem.

Cointelegraph reached out to Terraform Labs and the South Korean Prosecutor’s office for comment but did not receive an immediate response.

Here’s how Bitcoin promotes global financial inclusion, according to Prince Philip of Serbia

Prince Philip of Serbia outlines key ways in which Bitcoin promotes global financial inclusion and its importance in conflict-affected nations.

The fundamental aspects of Bitcoin (BTC) continue to power global financial inclusion, financial privacy and autonomy in conflict-affected nations despite difficult macroeconomic and cryptocurrency market conditions over the past year.

These are the key takeaways of an in-depth interview with Prince Philip of Serbia and Yugoslavia conducted by Cointelegraph Brasil’s Cassio Gusson as 2023 gets underway.

Prince Philip Karađorđević shared his thoughts on the sector as he joined Jan3 as its chief strategy officer. The Bitcoin technology company seeks to drive the adoption of the preeminent cryptocurrency and was founded by Bitcoin proponent Samson Mow in 2022.

In April 2022, Jan3 announced a partnership to help develop El Salvador’s Bitcoin City and has since opened up an office in the BTC-friendly nation, according to Prince Philip. The company also intends to provide guidance and services to other nations looking to adopt Bitcoin in some capacity.

Prince Philip told Cointelegraph that Bitcoin remains important as the preeminent cryptocurrency, with its technological specifications allowing for the emergence of a fairer monetary system and individual sovereignty of wealth:

“Bitcoin, specifically, has the potential to promote financial inclusion because of its decentralized nature, which makes it resistant to censorship and manipulation.”

This is particularly important for individuals or communities without access to financial institutions or those residing in countries with unstable or corrupt governments and institutions.

Prince Philip also highlighted Bitcoin’s ability to “bank the unbanked,” given its low barrier to entry. Any person with a smartphone can download a Bitcoin wallet and gain access to “basic banking services,” which has become extremely relevant in emerging economies:

“Issuing a checking account with a minimum balance, a checkbook, a debit card, is simply too expensive for low-income consumers in the developing world, and for the banks themselves.”

Furthermore, Prince Philip highlighted that Bitcoin has no branches, correspondent banking relationships nor employees. Stablecoins are becoming equally useful in developing nations where people want to save in the U.S. dollar:

“Bitcoin and stablecoins have the potential to provide much-needed financial inclusion to people in countries with limited or no access to traditional banking services.”

Both options provide a secure, cost-effective means to send and receive payments, even in remote areas with limited infrastructure. The confines and regulations of traditional banking are also removed, giving people access to some sort of financial facility where traditional services are not accessible.

Conflict-affected nations are also prime candidates for Bitcoin adoption, according to Prince Philip. Bitcoin facilitates cross-border transactions, offers financial privacy and autonomy, and promotes economic development:

“This can be particularly useful in countries with authoritarian governments or a history of conflict, where individuals may be concerned about revealing their financial information or being subject to censorship or seizure of assets.”

El Salvador has established itself as the banner carrier for sovereign Bitcoin adoption after becoming the first country to recognize BTC as legal tender in June 2021. While there are some teething problems remaining — as Cointelegraph journalist Joe Hall outlined after a recent visit to the nation — El Salvador is a living example of what nation-led Bitcoin adoption looks like.

Prince Philip believes that more countries should allocate a portion of their national treasury to Bitcoin, highlighting the established moniker of digital gold. There are tangible results being realized in the country as well, which Prince Philip describes as an example for other nations to follow:

“Already we’re starting to see the economic benefits of the Bitcoin policies, including accelerated GDP growth, tourism, new businesses being established and many other intangible markers.”

While Bitcoin is positioned as a driver of financial freedom, Prince Philip gave a cautionary comment on the development of central bank digital currencies. He cited caveats and limitations to nation-controlled CBDCs, which could be used to place restrictions or outright blocks on people’s money.

Prince Philip of Serbia suggests bringing Bitcoin into the classroom

The prince, jokingly implying he was rebuilding amid a bear market, constructed a sandcastle on the beach at the Surfin’ Bitcoin 2022 before it was unceremoniously stepped on.

Speaking to Cointelegraph over sandcastles at the Surfin’ Bitcoin 2022 event at Casino de Biarritz in France on Thursday, Prince Philip said he was “bullish on Bitcoin” in part because of the impact it could have on children’s education around the world. The prince, a self-described Bitcoin (BTC) maximalist, hinted that part of his keynote address at the crypto conference — only the second one for which he was a speaker — will focus on informing those in and out of the space of the potential benefits of Bitcoin.

“Kids need to understand what Bitcoin is about,” said Prince Philip. “The main thing is the history of money — this is something that we weren’t taught in schools […] Education is getting worse as I can see it.”

Citing an example from his own family, Prince Philip said his four-year-old son Stefan was trying to develop some conceptions around Bitcoin by watching his father:

“He’s trying to get an idea of what Bitcoin is […] He understands that there’s Bitcoin and his father likes to talk about it.”

Filip Karađorđević, Hereditary Prince of Serbia and Yugoslavia, also known as Philip Karageorgevitch, says that education is lacking when it comes to cryptocurrencies like Bitcoin.

Prince Philip building sand castles with Cointelegraph’s Joe Hall at Surfin’ Bitcoin 2022

Prince Philip, jokingly implying he was rebuilding amid a bear market, constructed a sand castle on the beach at the venue before it was unceremoniously stepped on by a passerby. In July, he reportedly said that Bitcoin adoption was inevitable for all countries whose citizens practice Islam because “it makes perfect Sharia money.”

The BTC maximalist, though always a public figure due his title, became known to many in the crypto space following a March interview in which he said “Bitcoin is freedom, and this is something that I want for everyone.” He also attended the Bitcoin Miami conference in 2022. However, the prince has suggested he lacked the authority to declare the crypto asset legal tender as El Salvador did in September 2021.

Prince Philip of Serbia calms rumors of Arab country Bitcoin adoption

In an interview with Cointelegraph, the hereditary prince nuanced his views on Bitcoin adoption in the Middle East and shed light on Bitcoin in Serbia.

Prince Filip Karađorđević, known as Philip Karageorgevitch in English, placated rumors that an Arab country would “soon” adopt Bitcoin (BTC) as legal tender. In an interview Philip delivered from Serbia, the prince explained that Bitcoin adoption is an inevitability for all countries.

As a result of the thesis he first shared on a Bitcoin Reserves podcast, some news outlets jumped at the comments. Headlines that an Arab country would soon adopt Bitcoin quickly disseminated. However, as a Bitcoin advocate, Philip expounded that Bitcoin adoption is, in fact, inevitable for all countries and not just Arab states:

“It’s definitely going to happen. But I don’t know which country or who is going to do it where or anything like that, but it’s bound to happen. Every country will eventually adopt Bitcoin.”

The Prince shared that Bitcoin is an excellent fit for Muslim countries because “it makes perfect Sharia money.” Islamic law, known as Sharia, is based on Quran teachings and dictates whether something is permissible (halal) or illegal (haram). In the case of money, Philp would argue that Bitcoin is, in fact, halal and a perfect form of Islamic finance:

“It’s only a matter of time before a Muslim country that follows Sharia law would have to adopt it. Some people grab that and make it as a selling item, saying that of course, if a prince knows it, that some Arab or Muslim country is going to adopt Bitcoin soon, then it’s going to happen.”

Prince Philip is technically the prince of Serbia and Yugoslavia because when the monarchy was abolished, Serbia as a country had not been created. “But today, obviously, Yugoslavia doesn’t exist. And since we are Serbian origin, then it’s of Serbia,” Philip clarified. Nowadays, Serbia is a parliamentary republic, although some Serbs support the creation of a parliamentary monarchy, similar to the United Kingdom. 

Philip burst onto the Bitcoin scene in March this year when he appeared on a chat show. He explained the difference between Bitcoin and crypto, adding that “Bitcoin is freedom, and this is something that I want for everyone.”

Philip told Cointelegraph that the three-minute video changed his life. He was a guest at the Bitcoin Miami 2022 conference and even played a role in the president of Madeira’s journey into Bitcoin.

Regarding Bitcoin adoption in Serbia, sadly, the prince cannot wave a royal wand and create a Serbian-style El Salvador in Europe. Nonetheless, there are certain benefits to Serbia adopting Bitcoin, the prince notes:

“There’s a lot of Serbs around the world. It’s a huge diaspora. I think the biggest concentration or the biggest diaspora is in Canada, then Chicago.”

The remittance use case for the approximately 5 million Serbs living outside of Serbia who regularly send money to their home country is convincing. Given that Bitcoin transcends borders, offering people a way to instantly send value across the world without a middleman, it could bolster Serbia’s economy. For El Salvador, in the first year of adopting Bitcoin, remittances into the country exceeded $50 million.

Related: Mercado Bitcoin plans to expand to Mexico

Furthermore, Serbia neighbors the Free Republic of Liberland. A micronation nestled upon a thin stretch of land on the Danube river, Liberland adopted Bitcoin as currency over seven years ago. There is evidence of grassroots Bitcoin advocacy in the Balkans.

Plus, one of the world’s most decorated tennis players, Novak Djokovic is a Serb. He’s also a freedom-lover and has staunch anti-state views. In the prince’s eyes, he’s an “obvious orange pill that needs to happen, 100%.”