The price of Luna 2, the native token of Terra’s hard fork, is trading 2.4% higher in the past 24 hours as per data from CoinMarketCap at $2.12 per coin despite news that the South Korean government is enforcing a travel ban on the developing team.
According to reports from a top media outlet within the country, the Financial and Securities Crime Joint Investigation Team petitioned the ban as the investigation concerning what went down with Terra’s original project and its flagship tokens Luna and UST.
Terra’s founder, Do Kwon, has not made comments concerning this new development but some of the key developers within the project have been vocal on their social media accounts. Daniel Hong, an ex-employee of the company, is among those who were affected by the measure.
— Daniel Hong (@unifiedh) June 20, 2022
In his Twitter account, Hong stated that “none” of Terra Labs’ former employees were notified by South Korean authorities about the measure.
Your capital is at risk.
Reports Are Circulating About Do Kwon Possibly Committing Fraud
Some media outlets have reported that Terra’s controversial founder may have siphoned approximately $80 million a month from the project according to information provided by Terraform Labs’ former employees to the US Securities and Exchange Commission (SEC).
Kwon categorically denied these rumors and commented that he was assigned a nominal cash salary while being the head of Terraform Labs for the past two years. In addition, Kwon emphasized that he lost “most of what he had” as a result of Luna’s crash.
The SEC is actively investigating Kwon as they alleged that he may have breached the country’s securities laws by offering synthetic assets that tracked the value of stocks and other financial instruments via the Terra’s Mirror Protocol.
Kwon’s legal team claimed that he was wrongfully subpoenaed by the SEC while he was in New York, alleging that there was a breach of the agency’s Rules of Practice when the documents were served.
However, a US appeals court dismissed the claim and investigations are still on course against both the company and its founder according to an SEC litigation release published on 9 June. (See release here)
Luna 2.0 Accumulates a Large Loss Since the Token Was Launched
Terra’s migration to a new network, an event also known as a hard fork, had various objectives including compensating those who lost money on Luna Classic (LUNC) and UST while also giving the ecosystem a fresh start, even though people will hardly forget what happened with the original blockchain.
It can be argued that none of these objectives have been achieved thus far as the value of Luna 2.0 (LUNA) collapsed right after the airdrop started to hit users’ wallets. Since then, the price of the digital asset has declined from $17.8 per coin to its current level of $2.07 for an 88% accumulated loss.
In addition, some of the most prominent decentralized apps (dApps) that made Terra popular once such as the Anchor and Mirror Protocols have not been launched on the new network, possibly as Terraform Labs has been facing mounting pressure from regulators due to how these schemes worked and their role in the demise of the project.
One aspect that remains to be clarified is how the funds that the Luna Foundation Guard (LFG) once had to reportedly stabilize the value of UST were deployed in the midst of the crisis.
Days before the stablecoin’s collapse, LFG reported that it had over $3 billion in reserves held in Bitcoin and Avalanche. These funds were allegedly deployed during the turmoil that led to UST’s depegging with Kwon stating that they went to “OTC trading firms” who were supposed to help the project in its effort to stabilize the coin.
Kwon did not clarify who these firms were and why or how they were selected for this particular effort. That said, a portion of the value of LFG’s reserves was lost as a result of the decline that BTC was experiencing back then.
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