South Korean Authorities Raid Terra-Linked Crypto Firms

  • Terra has faced several lawsuits since its collapse, with many accusing the firm of fraud.

Since Terra’s collapse in early May, many people have anticipated authorities and regulators to open an investigation into any possible fraudulent activities that might have wiped off over $40 billion of investors’ funds. South Korean investigators have since looked into the matter and recently carried out a search and seizure in 15 firms.

The firms affected by the search included seven crypto exchanges, according to local authorities. The offices of the companies associated with the collapse of Terra such as Coinone, Bithumb, Copax, Korbit, and Upbit as well as others were raided by the Joint Financial and Securities Crime Investigation Team of the Seoul Southern District Prosecutors Office. Authorities allegedly collected information regarding TerraUSD, previously UST, and Terra (LUNA) transactions. Terra’s collapse reportedly affected about 200,000 Korean investors.

Several media outlets claimed that authorities also searched the Dunamu & Partners company’s offices. This company was founded in March 2018 as a division of Dunamu, Upbit’s operator. In April 2018, Dunamu & Partners purchased 20 million LUNAC tokens which it claimed were for investment reasons, at a cost of about $0.12. The firm later sold its LUNA holdings for Bitcoin (BTC), early last year, which the company claims it still retains and hasn’t exchanged for cash.

Although its parent company, Dunamu, has distanced itself from the situation, Dunamu & Partners insisted that they had done nothing wrong by their actions. So, far, many of these companies are awaiting an official statement from the prosecutors. 

Several reports allege that authorities were looking for information regarding the LUNAC and Terra network coin transactions of individuals connected to the investigation, including Terraform Labs CEO Do Kwon and Terraform co-founder Shin Hyun-Seung.

Did Terra Commit Fraud?

Prior to its collapse, Terra was one of the biggest stablecoin platforms and had plans to revolutionize the system. Led by the confident Do Kwon, the firm was able to attract thousands of investors with its promise of stability and visionary adventures. However, some of these investors have sought justice since things turned sour, accusing the platform of foul play.

Many of the affected investors believe Terraform Labs and its co-founder Do Kwon committed fraud and have since filed charges against them, employing the services of  local law firm L.K.B. & Partners. A spokesperson for the legal firm said of the situation,

The defendants did not properly inform about design errors and defects in the algorithm while designing and issuing Luna and Terra coins in a collusion to attract investors.

Do Kwon has since denied claims of engaging in fraud and instead, retained his commitment to the new Terra ecosystem. In a chat with the Wall Street Journal, Kwon expressed his confidence in his team’s ability to bounce back stronger than it was before the crash. He further claimed that several builders were in the process of relaunching their apps on the new chain. Kwon, who was estimated to have made billions from the crypto space claimed he suffered personal loss in Terra’s crash but rubbished claims that the project was fraudulent from the start. He said,

I made confident bets and made confident statements on behalf of UST because I believed in its resilience and its value proposition. I’ve since lost these bets, but my actions 100% match my words. There is a difference between failing and running a fraud.

Although Kwon claims to sympathize with the affected families, Terra Labs believe mounting lawsuits are meritless. With prosecutors chasing the case, it is only a matter of time before investors receive their answers.

Lawrence Woriji Verified

Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.

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