CRYPTOCIES

Terraform Labs Investigation Intensifies: Seven Crypto Exchanges Linked To Collapse Raided


The South Korean cryptocurrency ecosystem is still experiencing issues because of the Terraform Labs probe. According to reports, the nation’s authorities advanced the probe on Wednesday with their most recent actions. The investigation into the fraud claims against the Terraform Labs management is still ongoing.

Terraform Probe Heats Up

As part of their ongoing inquiries into the failure of Terraform Labs’ iconic Terra protocol earlier this year, authorities in South Korea have started conducting searches on cryptocurrency exchanges.

The searches are believed to be connected to the allegations of fraud regarding the Terra network crash. The prosecutors started seizing documents and other data sources from the businesses at around 5pm local time.

Seven cryptocurrency exchanges were among the 15 businesses that were the target of a search and seizure by South Korean prosecutors looking into Terraform Labs.

The offices of Upbit, Bithumb, Coinone, Korbit, and Copax, 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 regarding TerraUSD (formerly UST) and Terra (LUNA) transactions, which resulted in losses for almost 200,000 Korean investors after the tokens’ significant price devaluation and subsequent collapse in May. Terra (LUNA) is now Luna Classic (LUNC).

Additionally, according to Yonhap, the detectives carried out searches at least eight additional places, including the homes and offices of those involved to the investigation.

Do Kwon and Daniel Shin, the co-founders of Terraform Labs, are the targets of many legal actions. These include lawsuits alleging that Kwon and company cheated investors out of billions of won, as well as rumors that law enforcement is looking into the company for allegedly operating a Ponzi and a money laundering scheme. Kwon’s tax papers were confiscated by officials in June as part of a probe into possible tax evasion. The Terra matter reportedly came up at a meeting between American and South Korean officials last month.

terraform

BTC/USD trades above $24k. Source: TradingView

South Korean officials have also opened an inquiry into one of the company’s workers for allegedly embezzling Bitcoin in May 2021. However, there was no evidence connecting the suspect to Do Kwon.

Additionally, recent analysis from the blockchain security firm Uppsala Security and CoinDesk Korea has confirmed the assertions of some who think the Terra ecosystem’s demise may have been an inside job.

One of Terra’s major designers, Mr. A, was banned from leaving the country as part of an inquiry by the Joint Financial and Securities Crime Investigation Team of the Seoul Southern District Prosecutor Office.

Related reading | South Korea Blocks Terra’s Employees From Leaving The Country Amid Investigation

Bank Transactions Also Part Of Probe

The authorities have reportedly questioned banks for any connections to potential fraud, according to a Bloomberg article. The risk of “money laundering or currency speculation using crypto assets” is being investigated by the banks. The article also stated that Shinhan Bank and Woori Bank were two of the major regional banks that the authorities had contacted.

“The regulator is examining whether laws on money laundering and foreign exchange trading were broken. Regulators have strengthened collaboration with the country’s prosecutors on the probe.”

A spokesperson of Shinhan Bank said that although the precise quantity of the transaction has not yet been determined, a regulatory investigation is now underway. Additionally, prosecutors are investigating the connection between the aforementioned transaction and nearby crypto exchanges. Whether there were erroneous payments made to stakeholders abroad appears to be at the heart of the investigation. As a result, the commercial banks inevitably become the focal point of the investigation into unusual international transactions.

Related reading | Terra’s Plot Thickens: Prosecutors Uncover Secret Subsidiary Used As Fund Channel

Despite having its headquarters in South Korea, Terraform Labs’ bankruptcy and the events that followed it have had a significant impact on the cryptocurrency industry. Investors impacted by the UST and LUNA fiasco in the United States hinted at taking legal action against yield generation program Stablegains for allegedly misappropriating $44 million in deposited cash.

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