Korean police and prosecutors are investigating DoKwon’s Terraform Labs after the $ 40 billion bombing of his tokens has shaken the global crypto market.
The Seoul National Police Agency said it has begun investigating allegations that employees of the Terraform Institute have embezzled the company’s undisclosed amount. Bitcoin Holding.
The investigation was submitted by the Southern Seoul Public Prosecutor’s Office in late May on behalf of a total of 81 investors on a allegation that “the founder of Terraform and the company tricked investors with defective algorithm coins.” It takes place after initiating the investigation of two collective complaints. document.
Financial authorities around the world are working to tighten the regulation of the next crypto market: Spectacular collapse of terraUSDStablecoin, and its corresponding Luna, were developed by a 30-year-old Korean.
A South Korean prosecutor’s office spokesman said a South Korean special financial crime unit revived by the new Minister of Justice Han Dong is investigating the crash.
“We are investigating the case because people have accused them of fraud and violations of financial regulations and complained to the founders,” he said.
According to the South Korean Financial Services Commission, about 280,000 Koreans had 70 billion Luna coins. Investors were attracted to tokens because they were able to deposit terraUSD coins. Promised a 20% yield..
Kwon did not respond to a request for comment from the Financial Times. According to his acquaintances, he is believed to be in Singapore.
Daniel Shin, co-founder of Terraform Labs, has denied investors accusations of fraud and financial regulatory violations. “I didn’t mean to deceive because I just wanted to innovate the payment system with blockchain technology,” Shin told FT.
“We didn’t realize there was a flaw in the coin’s algorithm, and we didn’t even try to manipulate the price,” he added.
According to the Financial Supervisory Service, South Korean regulators are also planning to conduct an on-site review of a digital payment system called Chai operated by Shin, as it was previously linked to the terraUSD / luna network.
According to Shin, the Chai payment system broke off its relationship with Terraform Labs in 2020.
Korea was an early adopter CryptocurrencyThe Korean won has won the third most widely used currency in Bitcoin trading after the dollar and yen. According to Coinhills data, the won accounts for about 3 percent of global transactions.
More than 12 bills are pending in the South Korean parliament. Strengthen investor protection By holding the cryptocurrency exchange responsible for related crimes such as unfair transactions and financial fraud.
Since Luna’s crash, Terraform Labs has split the Luna blockchain in half with a “hard fork” of the network, awarding new coins to previous owners.
Almost two weeks after the new Lunacoin opened, its price fell by more than 80% to a new low. Coins are currently trading at $ 3.5, according to CoinGecko data.
Additional Report by Scott Chipolina in London