South Korea initiates investigations against the company behind Luna's crypto crash

The South Korean police and public prosecutor investigate DO Kwon's Terraform Labs after the $ 40-billion-dollar implosion has shaken the global cryptom market.

The Seoul Metropolitan Police Agency said that she had launched an investigation into allegations that an employee of Terraform Labs had embezzled an unauthorized amount of the company's Bitcoin stocks.

The investigation was carried out after the public prosecutor's office of the southern district of Seoul had initiated an investigation into two collecting lawsuits at the end of May, which were submitted in the name of 81 investors for allegations that "the founders of Terraform and the company deceived investors with their incorrect algorithmic coins". The documents.

Financial authorities around the world are working to tighten the regulation of the cryptoma market after the spectacular collapse of Terrausd, a stable coin, and his counterpart Luna, which was developed by the 30-year-old South Korean.

A special unit for financial crime in South Korea, which was revived by the new Minister of Justice Han Dong-Hoon, conducts an investigation of the crash, said a spokesman for the public prosecutor's office in the southern district of Seoul.

"We are investigating the case when people have submitted complaints against the founders who accuse the fraud and violation of financial regulations," said the person.

According to the South Korean Financial Services Commission, around 280,000 South Koreans held 70 billion Luna coins. Investors were partly attracted to the token because they were able to deposit their terrausd coins for a promised return of 20 percent.

kwon did not answer a comment's request after a comment. According to acquaintances, Kwon should be in Singapore.

Daniel Shin, the co -founder of Terraform Labs, rejected the allegations of investors for fraud and violation of the finance regulations. "There was no intention to deceive because we only wanted to renew the payment processing system with blockchain technology," Shin told Ft.

he added: "We were not aware of any mistakes in the coins algorithm, and there was no attempt to manipulate their prices."

The South Korean supervisory authorities also plan a on-site check of the digital payment system called Chai, which is operated by Shin, since according to the supervisory authority it was previously connected to the terrausd/luna network.

Shin said that the Chai payment system broke off the connection to Terraform Labs in 2020.

South Korea was an early user of crypto, with the Korean Won after the dollar and the yen was the most common currency for Bitcoin trading. According to Coinhills, the WON accounts for about 3 percent of global trade.

More than a dozen draft laws are pending in the South Korean parliament to strengthen investor protection by taking crypto exchanges for crime-related crimes such as unfair trade and financial fraud.

Since the Luna-Crash, Terraform Labs has shared the Luna-Blockchain in a “hard fork” of the network in half and awarded the new luna coins to former owners of the coins.

Almost two weeks after the new Luna Coins came on the market, the coin has seen its value on new lows, whereby the price fell by more than 80 percent. According to Coingecko data, the coin is now traded at $ 3.5.

Additional reporting by Scott Chipolina