South Korean Prosecutors Call on All Terraform Labs Employees Following Terra (Luna) Collapse

South Korean Prosecutors Call on All Terraform Labs Employees Following Terra (Luna) Collapse

May 30, 2022 Off By Roland Guirdonan

South Korea has summoned all Terraform Labs personnel to examine the collapse of stablecoin TerraUSD (UST).

Seoul, South Korea | Source: OfficeChai

According to local media network JTBC, the Seoul Southern District Prosecutors’ Office’s joint financial and securities criminal investigation team has summoned Terraform personnel without identifying any sources.

In addition, an anonymous employee who was reportedly involved in the Terra blockchain’s initial development in 2019 has already testified. This individual is believed to have informed prosecutors that certain Terraform Labs employees were concerned about UST’s design.

Note that stablecoin UST plunged earlier this month, wiping out more than $40 billion in value for investors. The price of UST, which was always expected to be $1, dropped below 10 cents and has yet to recover.

CoinGecko data shows that it is currently trading at 3 cents. The LUNA token, UST’s sister token, has lost nearly all of its value and is now worth a fraction of a cent.

Last week, Terraform Labs unveiled the new Terra blockchain, Terra 2.0, as a result of the explosions. As part of the new blockchain, it dropped UST and dubbed the original LUNA coins “LUNA Classic” (LUNC).

Furthermore, JTBC emphasized that prosecutors are investigating the entire case. This includes whether CEO Do Kwon and other Terraform Labs executives were aware of UST’s design problems.

Prosecutors are also investigating whether local cryptocurrency exchanges conducted a thorough listing assessment before listing UST or LUNA.

Korea’s financial authorities, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS), reportedly conducted “emergency investigations” of local crypto exchanges earlier this month in order to improve investor protection.