Terra's LUNA recovery plan continues despite South Korean authorities pressure on Do Kwon

UPDATE: Terraform Labs is moving forward with its Ecosystem Revival Plan 2, which is expected to be completed on Friday, May 27th. Terra's LUNA 2.0 testnet is already live and once the launch of the new LUNA mainnet is completed, the rebirth of the native token as a genesis chain will be completed. Do Kwon and Terraform Labs reject the event being tagged as a hard fork, as the new blockchain will start with block 0 and abandon LUNA Classic. 30% of the new LUNA tokens will be awarded to both pre- and post-collapse LUNA and UST holders in a fixed manner. The vote for the LUNA recovery plan went through with 65% of positive votes amongst the Terra community despite the anger shown by plenty of investors affected by the Terra debacle two weeks ago. 

Do Kwon faces legal proceedings in South Korea while endorsing a revival plan to fork Terra with a new token, excluding TerraUSD. On Wednesday, South Korean authorities are scheduled to meet cryptocurrency exchanges Upbit, Bithumb, Coinone, Korbit and Gopax after instructing them to freeze Luna Foundation Guard assets. 

Also read: Whitleblower claims Do Kwon, Kanav Kariya and Sam Bankman-Fried were involved in Terra's LUNA and UST collapse

South Korean investors file lawsuit against Do Kwon and Daniel Shin

South Korean investors of the Terra community have started legal proceedings against Terraform Labs’ cofounders. Investors have filed a lawsuit against Do Kwon and Daniel Shin in response to the colossal crash of Terraform Lab’s LUNA and TerraUSD (UST). South Korean regulators have instructed cryptocurrency exchanges Upbit, Bithumb, Coinone, Korbit and Gopax to freeze assets linked to the Luna Foundation Guard (LFG). The authorities have scheduled a meeting with exchanges on May 25, 2022. 

South Korea’s ruling party will discuss the Terra de-peg event and decide whether they should be held accountable for funds lost by investors in the LUNA, UST crash. 

Police investigates Luna Foundation Guard 

According to reports by KBS, the South Korean police is keen on freezing LFG’s assets and scrutinizing the loss of user funds in the colossal Terra crash. The Seoul Metropolitan Police Agency’s cybercrime investigation unit is the regulatory authority that asked exchanges to withhold funds held in Terra-affiliated wallets. According to the same KBS report, the police are suspicious of the misappropriation of corporate funds. 

While the exchanges have no legal obligation to freeze funds, they could adhere to the South Korean police’s request. 

Kwon promotes LUNA revival plan despite legal proceedings 

Terraform Labs co-founder Do Kwon has recently surfaced online to remind LUNA holders that sending their LUNA to the burn address is not good. Kwon has asked the community to support the revival plan as voting ends on Wednesday. 

65.78% of voters favor the Terra fork and the removal of algorithmic stablecoin UST from the LUNA ecosystem. According to voting data, nearly 35% of voters continue to reject or critique the idea of a fork. 

Votes on plan for Rebirth of the Terra network

IMF head labels stablecoins a “pyramid” scheme 

After the collapse of Terraform Lab’s algorithmic stablecoin, Kristalina Georgieva, managing director of the International Monetary Fund (IMF) said,

When we look at stablecoins this is the area where the big mess happened. If a stablecoin is backed with assets, one to one, it is stable. When it is not backed with assets, but it is promised to deliver 20% return, it’s a pyramid. What happens to pyramids? ... They eventually fall to pieces.

The UST’s de-peg and colossal crash of sister tokens wiped out $39.1 billion from market value of Terraform Labs tokens. 

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