Despite the launch of their new blockchain on Saturday, developers of the Terra ecosystem including Do Kwon should be held to account in South Korea over the collapse of their ecosystem.
The Terra blockchain is in the eye of South Korea. On May 28, Do Kwon announced the creation of the very first block of its new blockchain, named Terra, as its “recovery plan” was accepted by its community on Wednesday.
If this news gives the feeling of starting from zero, it should not be forgotten that three weeks ago many individuals and investors saw their savings go up in smoke, following the collapse of the stablecoin terra usd (UST) and luna cryptocurrency, which were the essence of this ecosystem. These events are said to be closely scrutinized by the South Korean authorities.
According to Korean media outlet JTBC, the Seoul Southern District Procuratorate’s Financial Crimes and Securities Investigation Team summoned staff from Terraform Labs (the team of developers behind the creation of the Terra blockchain in 2018). in order to investigate the collapse of the ecosystem.
Among those interviewed, an employee who was involved in the development of Terra in 2019 admitted that there were doubts from the start about the cryptocurrency luna, launched in 2018.
“Even then, there was an internal warning that there could be a collapse at any time, but Do Kwon forced the launch of the cryptocurrency,” said the latter, quoted by the Korean media. .
The South Korean investigators are particularly interested in whether the developers of Terraform Labs, as well as Do Kwon “neglected in advance the design flaws” of luna and the UST, and in particular of the Terra ecosystem.
The media also reports that 76 investors have filed a complaint with the prosecution against Do Kwon and the co-founder of Terra Shin Hyun-seong, citing damage of 6.7 billion won (5 million euros).
100,000 holders of the Luna cryptocurrency
The Terra blockchain is also in the sights of the South Korean financial regulator, which seeks to best protect investors since the collapse of the ecosystem.
On May 17, according to the South Korean news agency Yonhap, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) in South Korea launched “emergency inspections” in platforms of cryptocurrency exchanges, asking them to share information about transactions related to UST and luna.
Separately, the FSC’s Financial Intelligence Unit held a meeting on May 24 at the National Assembly to enact a law on cryptocurrencies and to protect investors, reports the JTBC.
The latter notably called the case of the Terra blockchain a “whirlwind of death”, estimating at 100,000 the number of South Korean holders of the Luna cryptocurrency before its collapse.
The authority underlined “the need to emphasize the principle of self-responsibility of investors and to make investors aware of their protection”.