South Korea Launches Investigation Into Luna's Parent Company
KEY POINTS
- Last month, Terra (LUNA) lost its $1 peg and fell 99%, resulting in one of the most dramatic crashes in the crypto market thus far.
- Millions of investor dollars were lost and now an investigation has begun into the parent company, Terraform Labs.
Terraform Labs is in hot water once again and can't seem to get out.
Many in the crypto-verse watched in horror last month when Terra (LUNA) lost its peg as a stablecoin as well as 99% of its value over the course of one week. In what seemed to be some suspicious circumstances, these two coins that formerly were popular cryptocurrencies plummeted in a perfect storm, left the company and investors with huge losses, and made cryptocurrency news headlines in the worst way.
Of course in any financial sector, and especially one still so new as cryptocurrency, crashes happen. It seemed as though LUNA had developed a relaunch plan and was priming itself for a comeback. In what Terraform Labs was calling "Revival Plan 2," a new blockchain would be created to run separately but parallel with the old. The old would be renamed Terra Classic and Luna Classic (LUNC), while the new coins would be Terra 2.0 and LUNA. Naturally, many investors would be wary of a new attempt.
A Terra-ble time for LUNA
Now, however, a local news report has surfaced announcing that South Korean authorities have launched a full investigation against Terra's (LUNA) developers. Terra (LUNA) is under the umbrella of Terraform Labs, and the entire company now will be subject to investigation. The Joint Financial and Securities Crime Investigation team of the Seoul Southern District Prosecutors Office will lead the Investigation.
It is claimed by the local South Korean media that the investigation team already has some key evidence in support of the claims. According to them, some Terraform Labs employees had some concerns and saw warning signs of the volatility of the coin that led to the crash.
The announcement of this investigation came right after five Korean cryptocurrency investors filed charges of fraud and financial regulations violations against Terraform Labs founders Do Kwon and Daniel Shin. These investors hired law firm LKB & Partners to conduct the prosecution. The firm made these comments in a statement, "The design and issuance of Luna and Terra to attract investors, but the failure to properly inform them about the flaws, and the unlimited expansion of Luna's issuance amounted to defrauding investors."
Our Research Expert
Katie Clinebell is a freelance content creator and digital marketing strategist for FinTech, blockchain, and crypto brands. She has created award-winning campaigns for Snapple and Tai Pei Frozen Asian Food and received an Adobe Academic Achievement Award for content about Olympic athletes.
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