US Department of Justice investigating the collapse of Terra stablecoin: Report
- Terraform Labs and its former employees have been questioned per Wall Street Journal.
- Earlier last month, Terraform Labs, along with its former CEO, Do Kwon, was charged by the SEC with fraud.
- Luna Classic price climbed the charts by 10% in the last 24 hours to trade at $0.0001316.
Nearly a year since Terraform Labs first collapsed, regulatory authorities are still pursuing its unfateful stablecoin TerraUSD (UST). The United States Department of Justice is joining the list, which will spearhead another investigation regarding the same.
US DoJ after Terra and Do Kwon
According to a report from the Wall Street Journal, the Justice Department is potentially investigating the collapse of Terra’s stablecoin. The DoJ’s investigation is said to be touching the same base as the Securities and Exchange Commission (SEC) did, with the department also questioning former employees of the company.
The Justice Department is also pursuing the lead of Chai, the blockchain responsible for enabling UST. Created by Terraform Labs, the blockchain was said to be conducting millions of transactions, a claim made by Do Kwon and the team, which turned out to be false.
Earlier last month, even the SEC filed charges against the company and its founder, Do Kwon. The regulatory body alleged that Terraform Labs and Do Kwon orchestrated a multi-billion dollar crypto fraud. According to the SEC charges, Do Kwon was marketing the crypto assets as an opportunity to earn profit.
If the investigation reaches a conclusion and Terraform Labs and Do Kwon are found responsible, they could most likely face criminal charges, which could lead to a prison sentence.
Luna Classic continues on its path
Unbothered by the broader market developments surrounding Terra, LUNC price followed the cues of Bitcoin and Ethereum to mark a 10% rise in the span of 24 hours. Trading at $0.0001316, the altcoin is treading pretty close to the critical support at $0.0001188.
If this support is lost, there is a high chance that Luna Classic price might face significant corrections, which could carry on until LUNC hits a six-month low of $0.0000825. This would mark a 37.39% crash for the cryptocurrency.
LUNC/USD 1-day chart
However, the cryptocurrency is also looking at reclaiming the recent losses, but for the same, it would need to rise above and flip the resistance at $0.0001422 into a support floor. This would allow LUNC to initiate a rally toward a critical resistance at $0.0001573. Consequently, LUNC would invalidate the bearish thesis while also marking a 20% rise.
Author
Aaryamann Shrivastava
FXStreet
Aaryamann Shrivastava is a Cryptocurrency journalist and market analyst with over 1,000 articles under his name. Graduated with an Honours in Journalism, he has been part of the crypto industry for more than a year now.
