Special unit tasked with investigating last week’s collapse of the Terra blockchain


According to South Korean media reports a
special investigative and prosecutorial specialized financial crimes unit has
been tasked with investigating last week’s collapse of the Terra blockchain’s main
cryptocurrencies.
As per SBS News
reported on Wednesday a group is designed to prosecute securities fraud and
unfair trading schemes including investigate the methods Terraform Labs used to
attract investors. The team consists of members from various financial
prosecutors and employees regulators, from the Financial Services Commission
and the Financial Supervisory Service. Along with core members Terra team
including co-founders Do Kwon and Shin Hyun-seong all are potentially at risk.
In the community many hold Kwon
responsible for the collapse of the project. South Korean
investors will also bring a civil lawsuit against Kwon for damages, as well as
a criminal lawsuit for fraud against him. Additionally, they
will push for Kwon's assets to be seized. The founder Do Kwon had to faces hefty tax
fines. Last week a
resident of Singapore filed suit against Kwon week on behalf of at least 1,000
other residents who invested in the Terra ecosystem. This lead to Kwon’s legal
troubles extending beyond South Korea.
According to Edaily, the investigation centered on the
formation of the Luna Foundation Guard (LFG) and a relocation of the company's
headquarters for tax purposes.
Korean news
outlet SBS News reported that the Terra case would be the first the resurrected
Securities Crimes Joint Investigation Team would investigate. A representative
from the team told SBS News that, “The Terra case caused severe damage to
average citizens which led us to designate this as the first investigation.” However,
the severity of the Terra situation is illustrated by the fact that it is the
first case the investigators will handle in two years.
The team handled
high-profile cases that lead to earn the moniker The Grim Reapers. Lime Asset
Management embezzlement scandal which was $1.2 billion was the largest cases
the team handled. Case is set to be reopened and the team was disbanded before
the investigation was complete. The unit earned nickname "Yeouido Grim
Reaper," due to accuracy and clinical approach after the Yeouido financial
district of Seoul. According to SBS News It was being disbanded two years ago
after which coming back into operation to investigate Terra. Even though the
legal entity relocated to Singapore, LFG's management is still carried out by
domestic companies and residents in th south Korea. According
to the report Korean tax authorities are also preparing a separate 100 billion
won fine to LFG.
Reports by
Culture Journal Moonwha Ilbo in May cite the Capital Markets Act as the legal
framework for the prosecution of violations of the crypto industry. However,
crypto-specific laws might ultimately replace the Capital Markets Act.
About Terra (LUNA) :
The Terra (LUNA) blockchain operates at
layer-1. By market cap both Luna and Terra USD (UST)
were in the top ten cryptocurrencies until UST's sale on May 8 sparked a death
spiral that has cost billions of dollars. On May 8, Terra had a market cap of
$24.8 billion. According to CoinGecko, now market cap is $959 million.
The Terra ecosystem fell into chaos last week after its
stablecoin offering, TerraUSD (UST), de-pegged which lead the price of Terra’s
native token Luna to fall in value as supply soared to protect the peg. Kwon is
now proposing forking Terra to revive the network.

Indrani bose
CBW - External Analyst
INDIA