Authorities in South Korea have cracked down on several business related to the Terra collapse of the UST and LUNA tokens.
According to a Wednesday report from News 1 Korea, government authorities recently raided 15 entities in South Korea connected to the Terra collapse. Among the raided entities were 7 crypto exchanges, including Upbit, Bithumb, Coinone, Korbit, and Copax. The search and seizure team behind the raid comprised enforcers from the Joint Financial and Securities Crime Investigation Team of the Seoul Southern District Prosecutors Office.
Reports from the raid in South Korea also state that the investigative team obtained data related to Terra (LUNA) and its now-defunct UST stablecoin. This data shows that approximately 200,000 Korean investors incurred losses from the tokens’ massive price plunge in May.
Following Terra Plunge, South Korea Law Firm Enlisted by Irate Investors to Prosecute Terra Labs
In the aftermath of its crippling price devaluation, LUNA and UST developer Terraform Labs has come under siege. Aggrieved victims of the Terra collapse reportedly hired local law firm L.K.B. & Partners to take on the South Korean-headquartered blockchain company. According to the plaintiffs seeking damages against Terraform Labs and co-founder Do Kwon, the company committed fraud. As it stands, more than 100 individuals have filed complaints with the prosecutors’ office and want L.K.B. & Partners to represent them.
Reports also state that the losses this group of investors suffered is approximately $8 million. Commenting on the Terra collapse, L.K.B. & Partners opines that the company’s mode of operation was flawed. In addition, Terraform Labs also failed to adequately inform its investors of these shortcomings for fear of alienating them. As a spokesperson for L.K.B. & Partners puts it:
“The defendants did not properly inform about design errors and defects in the algorithm while designing and issuing Luna and Terra coins in a collusion to attract investors.”
Korean Government Takes Action against Terra Labs
Soon after the LUNA and UST collapse, Terraform Labs faced punitive measures from the South Korean government for unrelated reasons. According to reports, the country’s national tax agency hit Terra and Kwon with a $78 million tax evasion fine. The agency believes that although Terraform Labs is a foreign-registered company, the “place of actual management” was South Korea itself. As a result, the blockchain firm and stablecoin developer is eligible for taxation in the East Asian nation.
In May, Terraform co-founder Kwon was summoned by Korean lawmakers to a parliamentary hearing. The South Korean Conservative Party noted that there were varying accounts of the crash and wanted more clarity. Furthermore, by inviting Kwon and the exchanges involved to a hearing, the lawmakers allowed them to set the record straight. In addition, these lawmakers also saw the hearing as an avenue to cull critical information. Lawmakers hope to use the data to influence schemes to protect investors. As Rep. Yoon Chang-Hyeon noted:
“We should bring related exchange officials, including Terra CEO Kwon Do to the National Assembly to hold a hearing on the cause of the situation and measures to protect investors.”
Following the crash, Terraform retired the LUNA and UST tokens and has since relaunched a new LUNA coin. However, at the time, Luna 2 struggled to get off the ground.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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