While the Terra collapse has stirred confusion in the Crypto world, South Korean officials are determined to probe fraud charges of the same.
According to a story in the Korean media, authorities on Wednesday conducted a raid at the Seoul residence of Daniel Shin, the co-founder of Terraform Lab.
Additionally it was stated that the raid was carried out as part of a larger inquiry into claims that fraud was to blame for the collapse of the stablecoin.
In May, the stablecoin abruptly deviated from its peg to the US dollar, triggering a cascade that affected the whole industry and led to the overexposure of a number of hedge funds and exchanges. A complaint was made against the founding company and co-founder Do Kwon in the same month by several investors in the South Korean-based Luna (LUNA) cryptocurrency, accusing them of fraud and breaking regional securities rules.
Terra’s collapse caused havoc in the lives of its employees
Prosecutors imposed a travel ban on a large number of the firm’s associates, including former employees, in June. The office did not identify the individuals subject to the one-month travel ban, although they may include current and former employees as well as developers. In order to protect their ongoing investigation, prosecutors declined to offer more information.
Furthermore, the collapse of TerraUSD and Luna, according to research by the Bank of Korea, South Korea’s central bank, was a major reason why the global currency market shrank by more than 40% from late last year when its market value had risen to almost $2.3 trillion. The recent increase in the U.S. Federal Reserve’s benchmark interest rate to combat inflation has also aided in the decline by driving away investors from risky assets, according to the bank.
According to Yonhap News Agency, authorities looking into a fraud case related to the downfall of algorithmic stablecoin also conducted raids, earlier this week, at seven cryptocurrency exchanges in South Korea.
According to the report, eight private residences and business locations were searched along with Bithumb, Upbit, Coinone, and four other local exchanges.
In order to determine if the founder of the Labs, Do Kwon, is responsible for purposefully causing the collapse of UST and LUNA, investigators are currently grabbing evidence from the raids.