South Korea launches full-scale investigation against Do Kwon and Terraform Labs

In the midst of Terra’s LUNA and UST collapse and the launch of LUNA 2.0, the Supreme Prosecutors' Office Republic of South Korea started a full-scale investigation into Terraform Labs.

Also Read: Terra's LUNA recovery plan continues despite South Korean authorities pressure on Do Kwon.

Terraform Labs under investigation

The Supreme Prosecutors' Office Republic of South Korea is investigating the employees working for Terraform Labs before Terra’s LUNA and UST death spiral. One of the main reasons behind the investigation is that Do Kwon allegedly knew the risks of launching an algorithmic stablecoin and the potential for its collapse.  

All employees of Terraform Labs were summoned and will be asked to submit information related to the case to help with the investigation. 

According to a local media outlet, the prosecution affirmed that a statement was issued against the launch of TerraUSD (UST) because the pilot model had failed before. An individual familiar with the matter said: 

"If you pay interest of several tens of percent to investors without a stable collateral or profit model, people may flock to you at the beginning," but "at a certain point in time, it has no choice but to collapse because it cannot handle interest payments and fluctuations in value." 

The Supreme Prosecutors' Office Republic of South Korea is also looking into other aspects, such as whether there was an intentional price manipulation or whether the LUNA and UST went through a proper listing review process.

To date, more than 76 complaints have been filed in South Korea, with the reported loss of these victims nearing $5.5 million. 

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