DOJ, FBI Investigate Terraform Labs In Connection With Algorithmic Stablecoin Collapse
The Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) are reportedly investigating the collapse of the algorithmic stablecoin Terra USD (UST) and Terraform Labs. Unknown sources say that former employees of Terraform Labs, the company behind the TerraBlockchainproject, were questioned by US law enforcement agencies.
Unusual relationship: Report claims Terraform Labs and South Korean payments firm Chai are under US investigation
After the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Terraform Labs and its CEO, Do Kwon, accusing them of fraud and orchestrating “a multi-billion dollar crypto-asset securities scam,” the DOJ and FBI are reportedly investigating Terraform labs . The Wall Street Journal’s Alexander Osipovich reports that people familiar with the matter have detailed that the FBI and DOJ of the Southern District of New York interviewed former members of the Terraform Labs team.
According to sources, the DOJ’s investigation is not significantly different from the SEC’s claims, and investigators are also looking into the relationship between Terraform Labs (TFL) and South Korean payments firm Chai. TFL co-founder Daniel Shin founded the payments company Chai, and the company has been alleged to have helped Terra launder funds. Several social media reports revealed that Terraform Labs and Chai had an unusual relationship. In mid-November 2022, it was reported that South Korean investigators were investigating Chai and Daniel Shin.
Osipovich noted that the WSJ contacted the SDNY DOJ and Terraform Labs, but both declined to comment. The report also noted that “it was not known what specific charges” the DOJ could pursue and the case could be dropped. Do Kwon’s attorney and TFL’s attorney are seeking to have the SEC’s lawsuit dismissed, and Kwon has vehemently denied committing fraud. Kwon has not been active on social media since February 1, 2023.
Currently, the one-time stablecoin Terra USD (UST), now referred to as USTC, is trading at $0.023 per unit. Terra’s former native asset, LUNA, now dubbed Luna Classic (LUNC), is priced at $0.00013233 per coin on Tuesday. Additionally, the second iteration of Terra’s native crypto asset, LUNA 2.0, is trading hands today for $1.42 per unit. TFL CEO Do Kwon lived in Singapore but his whereabouts are currently unknown. Prosecutors from South Korea believe Kwon could be in Dubai and possibly even Serbia.
What do you think the outcome of the Justice Department and FBI investigation into Terraform Labs will be? Do share your thoughts in the comment section below.
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Source: Crypto News Deutsch
