Seoul Public Prosecutor's Office launches investigation against Terraform Labs
Seoul law enforcement authorities launched an investigation against Terraform Labs, and Terra chief ideologist Do Kwon.
According to Yonhap, the case has been referred to the Joint Financial and Securities Crimes Investigation Unit. The plaintiffs were investors who lost more than $1 million on their investments in Terra.
South Korean authorities estimated that about 280,000 local investors owned 70 billion LUNA worth about $8 million. Lawyers representing legal giant LKB & Partners claim that Terra's developers failed to properly inform investors about the system's shortcomings, a fact that “amounts to fraud.”
It is worth noting that LKB & Partners sued the founder and CEO of Terraform Labs following the collapse of the TerraUSD stablecoin. There were also claims that some of the employees of LKB & Partners may also join the lawsuit since they lost money as a result of the UST crash.
Recall that in early May, the UST stablecoin lost its peg to the U.S. dollar. It remains unclear what exactly caused such an incident. UST/USD quotations collapsed from $1 to $0.12. The native ecosystem token Terra has also been affected, losing 100% in the past week in the LUNA/USD pair, at which point the blockchain was halted.
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