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Entities That Caused Terra Collapse Were Raided by South Korean Prosecutors

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Following the collapse of Terra, further investigative actions were taken by the South Korean authorities. Seven bitcoin exchanges were among the 15 companies that South Korean authorities investigating Terraform Labs searched and seized.

The offices of Upbit, Bithumb, Coinone, Korbit, and Gopax, as well as other companies connected to the collapse of Terra, were raided by the Joint Financial and Securities Crime Investigation Team of the Seoul Southern District Prosecutors Office, according to a report published on Wednesday by News1 Korea.

Authorities allegedly collected information on TerraUSD (formerly UST) and LUNA transactions, which resulted in losses for almost 200,000 Korean investors after the tokens’ significant price devaluation and subsequent collapse in May.

Few Terra victims appointed local law firms

Some of the victims of Terra’s collapse and UST’s de-pegging apparently hired local law firm L.K.B. & Partners to represent them in a lawsuit against LUNA and its co-founder Do Kwon on the grounds that the business committed fraud.

More than 100 people who allegedly incurred losses totaling more than $8 million filed complaints with the prosecutor’s office.

According to a representative for L.K.B & Partners, “The defendants did not adequately notify about design faults and deficiencies in the algorithm when building and releasing Luna in a conspiracy to attract investors.”

The bankruptcy of Do Kwon’s firm and the events that followed it, despite the company’s headquarters being in South Korea, significantly affected the cryptocurrency sector.

Investors impacted by the UST and LUNA fiasco in the United States hinted at taking legal action against yield generating program Stablegains for allegedly misappropriating $44 million in deposited cash.

CZ clarifies Binance’s interest in South Korea

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With layoffs, losses, and washouts becoming commonplace, Binance, the world’s largest cryptocurrency exchange, has a defined expansion strategy despite the current bear market having a significant influence on the entire cryptocurrency community. Over the previous few weeks, Changpeng Zhao has been continually swerving into other areas in the hopes of snagging licences. CZ has now announced that he is thinking about returning to South Korea.

South Korea has received a lot of attention recently. Following the Terra crash, the Korean government has taken considerable moves to control the cryptocurrency business. While doing a thorough analysis of the problem, the administration is also drafting new legislation. Binance’s potential entry into the region could be more difficult than planned in the midst of this turbulent period.

CZ is currently attending the VivaTech exhibition in France. Binance’s CEO apparently hinted about the company’s return to the region in an interview with a Korean news outlet.

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Binance decided to shut down the trading pairs related with the South Korean Won in August 2021. Furthermore, everything South Korean was withdrawn off the exchange. Prior to this, the exchange declared in 2020 that it will terminate its South Korean operations due to poor volume and usage.

Considering this, the exchange has proceeded to build relationships with several entertainment behemoths to investigate the Web3 sector of the digital world.

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With rumors spreading like wild fire in the forest, crypto enthusiasts seemed to lose their mind. However, CZ put an end to it all with Twitter thread.

Has Binance been cooking this plot all along?

With MimbleWimble [MWEB], Litecoin [LTC] has made a strong comeback this year. The asset’s privacy tag, on the other hand, proved to be a liability for the altcoin. Several South Korean exchanges then abruptly stopped supporting LTC. Binance quickly followed suit, becoming one of the first big exchanges to drop support for LTC’s MWEB wing.

Furthermore, the bears’ fear continued to pervade the market, and CZ was poised to grow. In a recent interview, Binance CEO Changpeng Zhao explained how crypto winters allows the company to fully use the market balance.

South Korean Cryptocurrency investigators to find the needle in the hay

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The Financial Supervisory Service (FSS) of South Korea initiated an inquiry into payment gateway firms that interact with cryptocurrency on 3 June 2022. The Financial Services Commission (FSC) and the Financial Services Commission (FSS) are both government institutions, and the FSS is South Korea’s financial regulator.

According to local news portal Money Today Co., the FSS has sought reports from 157 payment gateways regarding any crypto-related services, future plans, and digital asset disclosure. However, according to an FSS investigation, only 6 had any digital assets.

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Whilst the FSS is now the principal financial regulator, South Korea announced the formation of the Digital Assets Committee on May 31, 2022. This is a temporary solution, according to the release, to bring structure to the virtual asset business following the Luna-Terra catastrophe.

The standards include screening criteria for newly listed assets, market and trade monitoring, a level of disclosure, and other investor protections, according to the release. The country’s five largest exchanges appear to have agreed on rules and have formed their own committee to assist prevent another Terra-like occurrence (LUNA).

The FSS announced a remote conference with other financial supervisory authorities from five countries in the Asia-Pacific area soon after it launched its probe. The Indonesian Financial Supervisory Service hosted the event, which also included Australia, China, and Japan.

The meeting included topics such as global market circumstances, big tech, and cryptocurrency. The Korean envoy underlined the necessity for cryptocurrency regulation, virtual asset disciplinary action, and the extension of financial regulatory frameworks.

Cryptocurrency investigation began with Do Kwon

South Korean officials launched an inquiry into Do Kwon, the main personality in the Luna event, on Tuesday, 24 May 2022.

Korean officials have requested that monies not be taken from the country’s biggest crypto exchanges. The Seoul Metropolitan Police Agency specifically requested that the Luna Foundation Guard refrain from taking any action. Clues have been discovered, according to the police, that may link the organisation to embezzlement.

Furthermore, the Digital Assets Committee will be led by Yoon Chang-Hyeon, the head of the People’s Strength Virtual Assets Special Committee, who met with the top exchanges in response.

Terra’s Fall Has Made South Korea Deploy a New Crypto Oversight Committee

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The rise and collapse of the Terra ecosystem had huge ramifications all across the world, but there’s little doubt that South Korea, the origin of its designer, was the most concerned of all.

According to the local news portal NewsPim, the country’s ruling party said Tuesday that it would organize a new Digital Asset Committee in early June, amid reports that Terraform Labs co-founder Do Kwon was facing legal issues in South Korea.

The committee, according to the article, will act as a watchdog over the crypto business and be in charge of policy development and oversight — at least until the next Framework Act for Digital Assets is approved and a permanent government institution dedicated to crypto is established.

Terra’s fall has alerted everyone

The committee is a reform and expansion of an existing body that oversees digital assets, and it is supposed to improve policy efficacy by streamlining the government’s crypto supervision operations.

Hwang Seok-jin, a professor at Dongguk University, suggested that “a ministry should be established to protect digital asset investors at the same level as stock investor protection,” according to a translated version of the original report which appeared in Korean.

The professor also compared the daily cryptocurrency trading activity in the country to that of the Kosdaq stock exchange, implying that the business should be treated similarly to regular equities.

Terra Luna 2.0 was released on May 27th at a price of $17.8 and immediately plummeted by 80% on day one. Following the launch, LUNA hit an all-time high of $19.54 before plunging below $6 the next day. It sank to its lowest point of $4.39 over the weekend, raising fears of another collapse.

However, the crypto skyrocketed nearly 90% once Binance listed Luna, allowing an influx of investors to purchase the coin. Luna has dropped double digits today and is now down 16%, as purchasing pressure has receded. Terra’s and its founder Do Kwon’s trust is eroding, and the cryptocurrency is no longer the most sought-after as it once was.

Luna Foundation Guard Funds Were Requested to Be Frozen by the South Korean Police

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Police in South Korea has sent warnings to cryptocurrency exchanges, requesting the freezing of funds linked to the Luna Foundation Guard.

On Monday, Korean authorities sent a request to the country’s largest cryptocurrency exchanges, urging that funds not be transferred. The Luna Foundation Guard was specifically asked by the Seoul Metropolitan Police Agency not to take any action. Authorities claim they have acquired evidence linking the group to embezzlement.

The Luna/Terra algorithmic stablecoin debacle earlier this month devastated investor portfolios overnight, with the coin’s value plummeting by nearly 99 percent. This request, on the other hand, is neither a demand nor legally enforceable. Each individual can choose how they wish to answer, but no one knows how they will react.

Luna Foundation Guard might be in trouble

Several large Korean investors have investigated and sued Do Kwon, the CEO of Terraform Labs, following the collapse of the TerraUSD (UST) stablecoin. As a result of this, the “Grim Reaper,” a Korean Financial and Securities Crime Joint Investigation Team, was revived.

Korean lawmakers have met with executives from Upbit, Bithumb, Coinone, Korbit, and Gopax, among other sites. Because the leaders of these exchanges are not obligated to comply, this meeting is most likely a ploy to put pressure on them.

“We will review the exchange’s investor safety procedures,” Yoon Chang-Hyeon, chairman of the People’s Strength Virtual Assets Special Committee, wrote on Facebook, according to Newspim.

According to the publication, it is reasonable to assume that exchange representatives will be held accountable in some way for the losses suffered by investors as a result of the Terra (LUNA) price drop. The Korean National Assembly, according to Newspim, is making moves to limit punishment in this sector.

Coinone has suspended LUNA trading as of May 11th, and Binance has also suspended certain spot trading.

The request to crypto exchanges and the Do Kwon probe are unrelated, despite the fact that this official report is part of a broader story.

Do Kwon Calls $78M Tax Investigation By South Korean Authorities ‘Unfair’

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Terraform Labs CEO Do Kwon maintained his innocence of any wrongdoing after reports emerged of a possible 100 billion won [$78 million] tax evasion in South Korea. The founder who has been at the center of attention since the UST collapse has denied the allegations slamming the tax collection as “unfair”.

The South Korean government needed money to support the corona [financial] spending and ingeniously charged the cryptocurrency companies millions of dollars [taxes]. We paid our share in full,” he quipped.

Do Kwon was also responding to another allegation that he fled to Singapore to escape from legal prosecution.

“I’ve been in Singapore since last December,” he said. “It’s a personal decision and something I’ve been planning for a long time.”

He also said, “We don’t have that kind of money,” he said in response to an investor’s request to use Terraform Labs’ funds to burn previously issued Luna.

We are willing to respond to any litigation or regulatory investigation to the best of our ability,” he stated. “We have nothing to hide.”

With regards to the dissolution of Terraform Labs’ Korean corporation shortly after the Lunar and UST crash, Do Kwon argued, “The closing of the company (Korean corporation) only took time, and the timing was purely coincidental.”

The Terraform Labs headquarters was established in Singapore and is still active, and [the company’s situation] is in good condition,” Kwon said. “We no longer have a Korean subsidiary.”

Do Kwon’s legal troubles pour in

On 20th May, the Seoul Southern District Prosecutors’ Office said that it has launched an investigation on Terraform Labs, and assigned the case to its Financial and Securities Crime Joint Investigation Team, a special financial crimes unit, a local media reported.

Prior to the announcement, five Korea-based crypto investors who allegedly lost a combined 1.4 billion won [about $1.1 million] filed criminal complaints against Kwon and his Terraform co-founder Daniel Shin accusing the duo of fraud and other violations of financial regulations.

South Korea’s financial authorities estimated that nearly 280,000 users owned a combined amount of 70 billion Luna in Korea.

Further prosecutors are also reviewing whether Terra’s ‘anchor protocol’, which guarantees a 20% annual rate of return when buying and entrusting UST, is a Ponzi scam.

South Korea Is Entering the Metaverse Ecosystem With $186 Million Investment

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South Korea’s Ministry has allegedly offered $186.7 million to build a comprehensive metaverse ecosystem. This money would be utilized to assist the impactful expansion of digital content as well as business growth across the country.

The funds will be used to complete four primary objectives in creating an all-encompassing metaverse environment, according to the ministry in an official statement released on Sunday.

The “Expanded Virtual World” is the name given to this. Several government agencies want to use the metaverse as a powerful platform for education, cities, and media expansion and growth.

South Korea decided to develop its own metaverse platform

South Korean content makers would also benefit from assistance on several fronts in order to recruit the best talent for the platform. The ministry went on to announce that it will sponsor community-oriented creative events, including a metaverse developer competition and a hackathon.

Simon Kim, the CEO of Hashed, also stated that the new metaverse platform would place a particular emphasis on increasing commercial development by giving financial assistance to members.

For those unfamiliar, Hashed is a South Korean cryptosystem that has previously invested in several metaverse initiatives such as The Sandbox and Decentraland.

Park Yungyu, the ministry’s head of communication and policy, recently claimed in an announcement that the plan to develop a metaverse platform will be part of the country’s more expansive “Digital New Deal.” This agreement consists of a set of measures to promote the development of digital technology.

The South Korean Ministry also expects the metaverse to have a broad global reach. This is because most enterprises in this world region would have continuous access to it throughout time.

Korea still has significant issues to address, as the sector has pointed out several times. For example, the government prevents games from creating their own tokens and does not allow non-fungible tokens (NFTs) to be used in gaming.

Even though South Korea is one of the world’s most significant gaming marketplaces, this is a problem that many have raised in the past. With the proposed investment and a more open approach towards metaverse and NFTs, these issues might be resolved soon.

South Korea’s KB set to create history by becoming the nation’s first bank to roll out crypto ETFs

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South Korea’s leading Kookmin Bank or KB is gearing to launch cryptocurrency exchange-traded funds [ETFs] and futures products to retail investors and is in the course of charting history by becoming the first bank in the East Asian nation to do the same.

Confirming the news, the bank’s head of index quant management Honggun Kim quoted, “We will launch a virtual asset-themed equity fund, etc. We plan to publish periodicals as well.”

As per a Monday announcement, KB notified that it had formed a Digital Asset Management Preparatory Committee to establish product and strategy capabilities of virtual assets and artificial intelligence investment funds. Apart from the product’s launch, the committee would study risk and compliance issues for the investment funds.

As earlier reported in TronWeekly, the news follows after Singapore’s largest bank DBS outlined its intention to launch new retail crypto investment products at the tail end of the year. On Feb. 14, the Bank’s CEO Piyush Gupta stated that DBS would focus on ramping up its crypto operations in 2022.

Having said that, the massive popularity of crypto exchange-traded funds in South Korea is on a steady rise.

South Korea’s retail investors driving the demand of crypto ETFs

As per data obtained from Samsung Asset Management which launched two of the ETFs, there are in total eight crypto-focused ETFs currently available for investors as of Jan. 19, 2022, raking inflows to the tune of $1 billion. The nation’s big asset management firms are releasing their investment products, tracking Bitcoin and other crypto assets.

The new ETFs comprise Samsung Asset Management’s KODEX K-Metaverse Active, KB Asset Management’s KB STAR iSelect Metaverse, NH Amundi Asset Management’s Hanaro Fn K-Metaverse MZ, and Mirae Asset Global Investment’s Tiger Fn Metaverse. Some of these ETFs come from tech firms, chipmakers, and stocks related to South Korea’s entertainment industry.

The growing appreciation for digital currencies in South Korea is just one example of the burgeoning interest among Asian investors that have several options of financial instruments underpinned by blockchain technology.

Referencing a recent Euroclear report, Rahul Sen Sharma, of Indxx, a financial service firm, said demand in Asia-Pacific for ETFs is set to surge from $1.5 trillion to $5 trillion over the next five years.

South Korean university will issue NFT degrees to all 2830 graduates

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Hoseo, a South Korean University, made an announcement at the graduation ceremony on Friday. They declared that all 2,830 graduates of the class of 2021 will receive non-fungible token (NFT) degrees and certificates.

Switching from paper-based diplomas to NFTs is expected to make administrative services more accessible, allow for certificate revisions, and prevent fraud. Switching from a paper-based degree to an NFT, according to the school, will improve administrative services and prevent degree fabrication or alteration.

In South Korea, NFTs have been accepted by various industries and entities, with the country’s top corporations, Samsung, SK, and LG, including NFTs in their newest range of goods and services.

South Korean University

South Korean tactics to evade fraudulent activities

The concept of digital certificates has been discussed in the past. There has been an upsurge in the number of fraudulent documents, certifications, and other types of fraud. NFTs are explicitly created to counteract this. Regardless of their immutability, there remains an opportunity for verification as long as the certificates persist on the blockchain in their non-fungible condition. With NFTs in place, the days of physical papers being forged and a high number of frauds being committed are gradually fading away.

More individuals voting in favor of the uniqueness of the information builds confidence, and people may have more faith in the project process. Assume the paperwork (in the form of NFTs) indicates he has 5 years of programming training experience and that the document is genuine.

There is no way to deceive today since the blockchain records who you are, who created the NFT in question, when it was minted, and to whom it was issued (in the instance of stolen assets). This is the notion that is now being contested, and it holds a lot of power.

The Samsung-supported Sungkyunkwan University had its graduation ceremony earlier this week. He was said to have given NFT credentials to three students.

In South Korea, many industries and organizations, including the country’s largest corporations like Samsung, SK, and LG, have begun to incorporate NFTs into their newest product and service lines.

Integration of NFTs in education would enhance access to high-quality education while also raising literacy levels worldwide. Deborah Ojengbede, the CEO of AFEN Blockchain Group, spoke on the importance of NFTs in education, saying:

“The fundamental driving factor for today’s world, which is still dominated by web2 enterprises, is the digitization of current procedures for accessibility.” NFTs can evaluate educational activities digitally because of the [amount] of time people spend online.”

South Korea includes crypto in the financial survey as it wrapped up the first phase of CBDC

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South Korea’s statistical agency National Statistical Office [NSO] has finally decided to investigate households’ digital assets, such as bitcoin, starting from this year. As per local media sources, the bureau on 23rd January 2022 announced that it will include digital assets in its household finances report. The Household Financial Welfare Survey is conducted to gauge ‘financial soundness’ through household assets, liabilities, income, and expenses, and to understand the level and change of economic life.

According to sources, discussion in South Korea’s National Assembly with regards to the taxation of crypto assets was delayed by one year to 2023, but NSO decided to go ahead with the investigation as scheduled to secure data. The National Statistical Office defined virtual assets as ‘virtual assets traded through exchanges’.

The Statistical Agency is however yet to decide whether virtual assets will be included in traditional financial assets such as savings, stocks, and bonds or real assets such as real estate and automobiles. Therefore, the date of publication of the statistics has yet to be determined.

In another fresh development, its central bank- the Bank of Korea [BoK] has reportedly completed the first stage of its two-part pilot testing of its CBDC in December. The institution also revealed that the project is currently running its second phase.

South Korea’s BOK inches closer for its CBDC

South Korea’s central bank said Monday that it has successfully completed the pilot testing of issuance and distribution of digital currency and has been carrying out the second phase “smoothly.” As reported in the Korea herald after the completion of the second phase in coming June, the BOK plans to begin discussions on its actual launch and commercialization.

BOK’s mock testing of digital currency took off on August 2021, in collaboration with tech giant Kakao Corp,’s blockchain arm Ground X. The central bank is reportedly skeptical of all major economies adopting their digital currencies and said it would take “a long time” for them to fully launch them. According to a report, BOK stated,

“Central banks in major economies have been taking the stance that the digital currencies will replace cash rather than savings in banks. We are testing a slew of measures that could minimize the negative impacts of the digital currency on financial stability.”