- The investigation raises the possibility of filing U.S. criminal charges against the South Korean crypto entrepreneur Do Kwon and Terraform Labs.
- The FBI and New York officials have already interrogated the former Terraform Labs team members.
The United States Justice Department is investigating last year’s collapse of the TerraClassicUSD (USTD) stablecoin, which contributed to the sweep away of $40 billion in the Terra ecosystem. The investigation has also raised the chances of filing criminal charges against Do Kwon, the South Korean crypto entrepreneur and stablecoin creator, and his company, Terraform Labs.
According to The Wall Street Journal report, the Federal Bureau of Investigation (FBI) and the U.S. Attorney’s Office for the Southern District of New York has already interrogated the former team members of Terraform Labs.
Moreover, in Manhattan federal court, the Securities and Exchange Commission (SEC) filed a criminal lawsuit against Kwon and Terraform Labs last month. Kwon and Terraform Labs were indicted by the lawsuit on deceiving the investors about the threat of the algorithmic-based stablecoin.
The TerraUSD stablecoin dropped its peg and swept away the market value of $40 billion in May 2022. In addition, the decline of the market value of coins in the Terra ecosystem also contributed to the decline of savings of many investors.
Subsequently, the investigators have also questioned the association between the South Korean-based payment platform, Chai and TerraIUSD’s operation platform, the Terra blockchain. The SEC also charged Kwon with misleading investors to believe that Terraform blockchain was the processing platform for Chai transactions.
Reportedly, Manhattan Federal Prosecutors have also been inspecting a series of chat-group discussions among the members of the leading trading firms, Jane Street, Alameda Research and Jump Trading. Notably, the investigation is examining whether market exploitation strategies were engaged in the TerraUSD stablecoin project.
According to South Korean Officials, Kwon left South Korea after the collapse to Singapore, and Dubai, and is now believed to be in Serbia. Even though two of the South Korean authorities were sent to Serbia to locate Kwon, their search attempts were unsuccessful.