South Korean prosecutors raided the home of Terraform Lab co-founder Daniel Tibia, deepening a übung into allegations of illegal activity behind the collapse associated with stablecoin TerraUSD.
A series of raids on crypto-exchanges and offices on Wednesday furthermore included Shin’s house and his payment application Chai Corp, the particular Seoul Southern District Prosecutors Office said via a text message, credit reporting an earlier report from MBC News. Police also visited 2 affiliated firms, the spokesperson for the prosecutors said, declining to provide further detail in an ongoing investigation.
Policymakers around the world have got zeroed in on stablecoins given the turmoil in the crypto markets, most notably the collapse of the popular TerraUSD token in-may. That spurred the debate about whether blowups of crypto experiments could pose a risk towards the wider financial system, along with calls for stronger regulation.
In Korea, prosecutors conducted raids this week on fifteen areas, including seven local exchanges for example Upbit, Bithumb plus Gopax. The action takes place about a month after authorities prohibited current and previous employees of Terraform Labs from departing the country. Prosecutors summoned a former official at an unit of Terraform Labs for questioning, KBS TV report has reported.
Prosecutors are also researching whether the company’s originator Do Kwon evaded taxes by shifting profits from cryptocurrency transactions to an offshore account, the local information agency Yonhap documented.
Shin plus Kwon, who is believed to be in Singapore, did not immediately respond to demands for comment.
Payment services
The two crypto business owners started Terraform Labs together in 2018 and initially divided ownership 50-50, Chai said in a declaration to Bloomberg in May. Their idea had been to use blockchain technologies for payment services. But since South Korea lacked a regulatory regime for this kind of offerings, Shin plus Kwon decided to component ways, according to Chai.
In March 2020, Shin walked down from his position as ceo of Terraform Labs and reduced his stake in the business to focus on building Chai. Kwon took control of Terraform Labs, which launched the Terra blockchain to support decentralised-finance applications, Chai mentioned.
TerraUSD, or even UST, and its sister Luna token became a key part of Kwon’s wider project, backing applications like the Point lending protocol. A vital premise underpinning the wider Terra ecosystem was UST’s peg to the US buck, supposedly safeguarded by a complex mix of methods and trader incentives involving Luna. It was a different model to stablecoins like USDC, which are backed by cash and other funding available.
UST crumbled from its peg in early May when the mechanism failed to protect this from a sharp selloff, rendering Luna nearly worthless and cleaning out some US$40bil (RM178. 11bil) within combined market value. The UST crash, consequently, exacerbated the rout in digital assets.
Since TerraUSD imploded, Shin offers put up a discover on his app distancing himself from Kwon and TerraLabs.
Since UST imploded, Shin provides put up a discover on the Chai app distancing himself from Kwon and TerraLabs.
Some Luna investors filed the complaint with Southern Korean prosecutors in-may, alleging Kwon and his company had committed fraud and involved in illicit fundraising. – Bloomberg