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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 the firm Terraform Labs. Unnamed sources say former employees of Terraform Labs, the company behind the Terra blockchain project, have been questioned by US law enforcement.
After the US 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 described the FBI and Southern District of New York DOJ questioning former members of the Terraform Labs team.
According to sources, the DOJ’s investigation is not much different from the SEC’s allegations, and investigators are also looking into the relationship between Terraform Labs (TFL) and South Korean payment firm Chai. TFL co-founder Daniel Shin set up payments firm Chai, and it has been alleged that the company helped Terra launder funds. Several Social Media reports has shown 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 “could not be learned what specific charges” the DOJ might pursue, and the case could be dismissed. Do Kwon’s attorney and the attorney for TFL are trying to get the SEC lawsuit dismissed, and Kwon vehemently denies any fraud. Kwon has not been active on social media since February 1, 2023.
Currently, 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 referred to as Luna Classic (LUNC), is priced at $0.00013233 per coin on Tuesday. Furthermore, the second iteration of Terra’s original crypto asset, LUNA 2.0, is changing hands today for $1.42 per unit. TFL CEO Do Kwon lived in Singapore, but his whereabouts are currently unknown. South Korean prosecutors believe Kwon may be in Dubai and possibly even Serbia.
What do you think the outcome of the DOJ and FBI investigation into Terraform Labs will be? Share your thoughts in the comments section below.
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