According to reports, South Korean authorities are considering filing Ponzi scheme charges against Do Kwon, the founder of Terra (LUNA), and the algorithmic stable coin TerraUSD (UST), both of which have recently plunged by over 99.99 percent, causing losses of around $40 billion.
Following the collapse of two major cryptos earlier this month(LUNA & UST), the CEO of Terraform Labs could face criminal charges.
The Anchor Protocol is at issue, a decentralized finance (DeFi) platform built on top of the Terra ecosystem’s blockchain that promised UST investors 20% returns. The Financial and Securities Crime Joint Investigation Team will look into the case, according to the report.
Five investors have sued Do Kwon and fellow Terraform co-founder Daniel Shin, alleging that they lost $1.1 million due to “fraud and other financial irregularities,” according to the report.
The legal action against Kwon comes after the Luna Foundation Guard (LFG) dumped billions of dollars in Bitcoin (BTC) in an attempt to save UST after it was de-pegged from the US dollar.
Currently, LUNA is Trading at $0.0001112 per token and UST is trading at $0.05946 which is supposed to be a stable coin maintaining the price of 1$. because of this de-pegging, a death spiral happened in both of the coins which in terms made bankrupt many of its holders.
Do Kwon dissolved Terraform Labs Korea days before the LUNA crash, according to court documents
Legal documents reveal the liquidation of two South Korean offices and the dissolution of the Terraform Labs Korea Corporation in the days leading up to the dual currency crash, which has been dubbed the “Lehman Brothers of crypto” by some.
According to information obtained from the country’s Supreme Court Registry Office and first reported by South Korean news outlet Digital Today, Do Kwon successfully liquidated two branches and an entire company.
Both the Busan and Seoul offices were scheduled for closure during a general shareholders meeting on April 30, with the closures taking effect on May 4 and 6, respectively.
The timing of these decisions has sparked concern in the crypto community due to their possible link to the events that led to the financial annihilation of the Terra (LUNA) and UST stablecoins in the early hours of May 10.
G-7 to Speed up Crypto Regulation Amid UST Crash
According to sources close to the matter, G7 finance ministers urged the Financial Stability Board (FSB) to accelerate their crypto regulation plans during a meeting in Koenigswinter, Germany on May 19, 2022.
The sudden collapse of Terra with no warning signs is a huge disaster for the entire crypto verse, as it has succeeded in wiping out hundreds of billions of dollars from the crypto markets, with retail investors and projects such as Hashed, a South Korean-based early-stage venture fund that invested heavily in the Terra ecosystem, bearing the brunt of the losses.
Authorities in various jurisdictions have increased their scrutiny and criticism of the blockchain space in the wake of the Terra debacle, with US Treasury Secretary Janet Yellen, who had previously called for crypto regulations similar to traditional financial systems, using the latest event to hammer home her point.
Also Read: BNB Chain Offers Support To Projects From Terra Ecosystem
For More Finance Related News Such As IPO, Stock markets, Please Follow Our Finance News Section. For news related to cryptocurrency, NFT, stable coins, and other crypto-related topics, Please follow our crypto news section.