Korea Investigation Team Launches Full-scale Probe on Terraform Labs

Regulation News

  • It has been confirmed that the prosecution has started a full-scale investigation into the Luna collapse.
  • The Seoul Southern District Prosecutors’ Office summoned all Terraform Labs employees.
  • Investigators focus their attention on whether or not Terraform Labs officials were aware of and neglected Terra LUNA’s poor design flaws from the start.

A couple of weeks after the catastrophic Terra LUNA collapse, it has been confirmed that the prosecution has started a full-scale investigation into the event. Over the weekend, the employees who were involved in the development work in the past were investigated.

The crime investigation team of the Seoul Southern District Prosecutors’ Office summoned all Terraform Labs employees. Some of the employees revealed that “even at the time, there was a warning inside that there could be a collapse at any time, but CEO Do Kwon forced the coin to be launched.”

Another employee was also quoted as saying, “If you pay interest of several tens of percent to investors without a stable collateral or profit model, people may flock to you at the beginning,” but “at a certain point in time, it has no choice but to collapse because it cannot handle interest payments and fluctuations in value.”

Another virtual currency called Basis Cash was used as an example as the currency had the same structure as Terra LUNA and ended up suffering the same fate.

This led investigators to focus their attention on whether or not Terraform Labs officials, including the CEO, were aware of and neglected Terra LUNA’s poor design flaws from the start.

In addition to this, prosecutors will also look into whether there was an intentional price manipulation and whether the domestic virtual currency exchange went through a proper listing review process.

The number of complainants against Terraform Labs now stands at 76. The amount of losses after the Terra LUNA collapse has increased, now amounting to 6.7 billion won.