Korean Prosecutors Raid Crypto Exchanges In Probe Into Terra Crash
At least seven cryptocurrency exchanges were raided by South Korean officials today in apparent connection with ongoing investigations into Terraform Labs.
A team of investigators from the Seoul Southern District Prosecutors Office began seizing transaction records and other materials from Upbit, Bithumb, Coinone and four other local exchanges around 5:30 p.m., they said.
The team was also conducting raids on eight other places, including the homes and offices of people involved in the case.
Investors in TerraUSD and Luna filed complaints against Terraform Labs’ CEO Do Kwon and co-founder Daniel Shin in May, accusing them of fraud over the loss of billions of won following the crash of both coins earlier that month.
The investigation team plans to analyze the seized material and then question witnesses before determining the size of the damage and whether the coins’ collapse was caused intentionally by Kwon, among other potential irregularities.
Last month, the investigation team secured Kwon’s records from the tax authorities to look into suspicions he evaded taxes.
Terra Collapse
Terraform Labs and its signature protocol, Terra, collapsed suddenly and unexpectedly in May of this year after its flagship stablecoin, TerraUSD (UST), depegged from its target parity of $1.
The Terra protocol relied on a complex method of balancing UST supply by inversely correlating it to the supply of its counterpart token, LUNA, which served as the protocol’s governance token and primary speculative asset. However, this mechanism failed when LUNA rapidly descended in price in the wake of UST’s depegging and the token ecosystem entered a death spiral that rapidly resulted in the loss of billions of dollars.
Though Terra enjoyed a brief run as one of the most popular DeFi attractions in the space, its collapse earlier this year is already remembered as one of the most stunning and spectacular meltdowns in the history of the industry. Today’s news indicates that the legal fallout from the dramatic downturn is far from over.
