Terra Crash Prompts Korean Investigation

Prosecutors in South Korea have reportedly launched an investigation into fifteen companies in order to analyze and seize them, including seven cryptocurrency exchanges.

Top Crypto Exchanges Face Terra Crash Charges

According to a local news outlet, the Seoul Southern District Prosecutors Office’s Joint Financial and Securities Crime Investigation Team raided the offices of Copax, Korbit, Coinone, Bithumb, and Upbit, as well as the other companies linked to Terra’s crash. Authorities reportedly gathered data on transactions in TerraUSD (UST) and Luna Classic (LUNC), in which nearly 200,000 Korean investors suffered losses following the extreme price devaluation and eventual crash of the tokens in May.

Some victims of the de-pegging of UST from the US dollar and the collapse of Terra reportedly hired a local law firm named L.K.B. & Partners to represent them in a legal case against Terraform Labs and Do Kwon (its co-founder), accusing the firm of defrauding them. Approximately $8 million has been lost by up to a hundred people who filed complaints with the prosecutor’s office.

Terraform Labs and its co-founder responded with a defrauding lawsuit.

According to an L.K.B. & Partners spokesperson, no adequate information has been provided by the defendants regarding the defects and design errors present in the algorithm at the time of structuring, as well as the release of Terra and Luna coins in an attempt to entice investors. Following the demise of LUNA and UST, the South Korean national tax authority reportedly ordered Kwon and Terraform Labs to pay a $78 million penalty for tax evasion.

Aside from that, Kwon was invited to a parliamentary hearing on the incidents related to UST’s de-pegging and Terra’s collapse by the native lawmaking entities. Although Terraform Labs’ headquarters are in South Korea, the entity itself, as well as the events surrounding the collapse of its tokens, have had a significant impact on the cryptocurrency world as a whole.

After experiencing the disastrous collapse, de-pegging, and resulting losses, LUNA and UST investors in the United States filed a legal action to reclaim nearly $44 million in deposited funds. The Luna debacle was just one of the casualties of the cryptocurrency price collapse. Some have referred to this event as the “Crypto Winter.” This may be the beginning of a domino effect with investors demanding a return of their core investment and Crypto platforms that weren’t fully prepared for volatile markets. It’s a wait and see period for crypto platforms that went belly up. The investigators and regulators are on a mission to protect investors from unfounded risk.

Read more about Cryptos here

Advertisement