According to reports, Korean prosecutors launched an investigation into the TerraUSD crash. According to reports, they summoned all Terraform Labs employees and one employee testified.
According to a report by JTBC, all Terraform Labs employees were summoned by South Korean authorities to investigate the collapse in TerraUSD, the stablecoin that is known as its UST ticker.
In particular, the Seoul Southern District Prosecutors Office’s Joint Financial and Securities Crime Investigation Team summoned Terraform employees. JTBC reported without citing any sources.
Unnamed employees are believed to have participated in the development of Terra’s blockchain in 2019. They have reportedly already testified. According to prosecutors, this employee told prosecutors that Terraform Labs employees had raised concerns about UST’s design.
The algorithmic stablecoin UST crashed dramatically earlier this month, destroying over $40 billion in value for investors. UST’s original price of $1 fell to below 10 cents, and has not recovered. According to CoinGecko data, it is currently trading at 3cents. UST’s sister token luna lost nearly all its value and is now trading at a fractional of a penny.
Terraform Labs created Terra 2.0 over the weekend as a result of the implosions. It dropped UST from the new blockchain, and renamed the original luna tokens “luna-classic” (LUNC).
According to the JTBC report prosecutors are investigating the entire matter including whether Do Kwon, CEO of Terraform Labs, and other executives failed to address UST’s design flaws. Prosecutors are also reportedly investigating whether local cryptocurrency exchanges were subject to a proper listing review prior to listing UST or luna.
In an effort to increase investor protection, Korea’s financial regulators, the Financial Services Commission and the Financial Supervisor Service (FSS), launched emergency inspections into local crypto exchanges.
Terraform Labs has been contacted by The Block to comment on the JTBC Report. We will update this story if we receive back.
