Home - Blockchain - In South Korea, Terraform workers investigated for the UST disaster


May 30, 2022

In South Korea, Terraform workers investigated for the UST disaster

According to reports, officials in South Korea have summoned all of Terraform Labs’ personnel in an effort to find out what caused Terra’s ecosystem to collapse earlier this month.

It has been reported that all Terraform Labs personnel have been subpoenaed by the combined financial and securities criminal investigation section of the Seoul Southern District Prosecution’s Office.

The report said that one of Terra’s workers had previously testified that there were internal worries about Terra’s viability. The unidentified employee engaged in building the coins in 2019 cautioned Terra creator Do Kwon that the tokens may collapse at any point. There were warnings from an employee, but CEO opted to disregard them, and pushed token launch, he stated.

Additionally, despite the failure of a company-wide pilot program, these tokens were nonetheless introduced, according to the employee.

Authorities in South Korea are conducting an inquiry to see whether LUNC or UST prices were manipulated intentionally. The authorities are also investigating whether the tokens were listed on domestic markets in accordance with appropriate procedures.

Since UST was not tied to any secure collateral and had no sustainable business model, investigators are worried that Terra’s tokenomics were incorrect.

CEO of Circle Jeremy Allaire told Protocol after the collapse that Terra was a “house of cards” that was doomed to fail, he said.

The Financial Services Commission in Korea estimates that 280,000 investors have lost money as a result of Terra’s demise. Do Kwon and Terra co-founder Shin Hyun-Seung have been named in a class-action lawsuit brought by some of the impacted investors.

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Additionally, legislators hope that Do Kwon would appear before South Korea’s parliament to discuss the disaster. Financial institutions in Terra have been ordered to freeze the assets of the non-profit Luna Foundation Guard as a result of a request from the police.

As a result of the Terra debacle, officials are scrambling to increase their monitoring of the country’s crypto exchanges.

Luna 2.0 is Do Kwon’s newest effort to resurrect the Terra biosphere. Shortly after its May 28 introduction, the new token suffered an almost 80% decline in value.