The collapse of Terra Luna in May this year attracted the attention of South Korean regulators and law enforcement authorities. Recently, prosecutors based in South Korea raided several local cryptocurrency exchanges and crypto offices in search of evidence linking to illegal activities related to Terra.
Korean police raid crypto exchanges
South Korean prosecutors investigating Terraform Labs have raided 15 companies, including seven cryptocurrency exchanges looking for evidence linked to Terra. According to a local news publication, some of the exchanges the Joint Financial and Securities Crime Investigation Team raided include Bithumb, Coinone, Gopax, Korbit, and Upbit. Other businesses that also offered services related to Terra were raided.
It is reported that authorities have received information linked to the collapsed TerraUSD (U.S.T.) stablecoin and Terra LUNA (which has been renamed Luna Classic). The authorities said that the collapse of the Terra ecosystem caused losses for around 200,000 investors in the country. These investors lost because of a notable price dip in the two tokens.
The investigators in this case are looking for evidence that will be used to determine whether the co-founder of Terraform Labs, Do Kwon, intentionally triggered the collapse of U.S.T. and LUNA.
Investigation into Terraform Labs
South Korean authorities have been actively investigating Terraform Labs, its executives, and employees to determine whether what happened was fraudulent. Terraform Labs is headquartered in South Korea, and while investors in the country suffered notable losses, the effects of the Terra crash were widely felt in other countries, given that LUNA and U.S.T. were once one of the best utility tokens.
Some people who lost money after investing in Terra have filed a lawsuit against Terraform Labs. These victims are being represented by a South Korean law firm, L.K.B. & Partners, in the lawsuit against Terraform Labs and Do Kwon.
The victims allege that Terraform Labs engaged in fraud. Over 100 people have filed complaints with the South Korean prosecutor’s office, with losses of around $8 million.
One of the spokespersons from the law firm representing the victims said that the defendants failed to give detailed information about the errors and the vulnerabilities in the algorithm used to peg the UST stablecoin to $1. The spokesperson said that Terraform Labs failed to make any disclosures to continue attracting investors.
The South Korean national tax authority is also involved in the case, and it has imposed a $78 million penalty to Terraform Labs and Do Kwon accusing them of tax evasion. Lawmakers in South Korea had also urged Do Kwon to speak before a parliamentary hearing and explain the Terra debacle.
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