- Raids on seven regional cryptocurrency exchanges were conducted by South Korean prosecutors as part of a larger inquiry into Terraform Labs’ operations.
- The unit also conducted raids at eight more locations, including the residences and workplaces of those connected to the case.
- The investigative team obtained Kwon’s papers from the tax authorities last month to check into claims that he had committed tax evasion.
Authorities inspected local cryptocurrency exchanges on Wednesday as part of a fraud probe into the demise of Terraform Labs’ digital currencies, TerraUSD and Luna, according to police. Around 5 o’clock in the evening, a team of detectives from the Seoul Southern District Prosecutors Office reportedly began obtaining transaction information and other materials from Upbit and other local exchanges as per reports from a Korean agency.
A crypto insider accused Do Kwon, CEO of Terraform Labs, of conducting a sizable scam utilizing Terraform Labs’ Mirror Protocol in late May. Later, the business was charged with money laundering through a South Korean front company as part of a complex operation involving a Seoul-based “blockchain consultancy firm K.”
Before evaluating the extent of the damage and whether Kwon purposefully caused the coins to collapse, among other potential anomalies, the investigating team plans to examine the evidence that was confiscated and then interview witnesses.
The investigative team obtained Kwon’s papers from the tax authorities last month to check into claims that he had committed tax evasion. At the same time, South Korean officials opened an inquiry into one of the company’s workers for allegedly embezzling Bitcoin (BTC) in May 2021. However, there was no evidence connecting the suspect to Do Kwon.
Authorities started the inquiry after learning about the suspected fraud of the suspect via intelligence sources. As a result, the employee’s accounts were frozen by the exchanges used to trade the cryptocurrency assets at the request of the Seoul police.
According to reports, the U.S. Securities and Exchange Commission (SEC) is looking into UST marketing activities for potential violations of federal investor protection laws.
In June, a class-action complaint was filed in the Northern California U.S. District Court against Kwon and Terraform Labs.
Prosecutors recently interrogated Terraform Labs staff involved in the creation of the blockchain to learn more about what took place. Notably, people with direct knowledge of the situation claim that the targeted employees allegedly opposed the introduction of the UST stablecoin due to potential “fluctuations in value.”
The investigation also aims to ascertain if the UST stablecoin listing adhered to the correct listing procedures when applying to exchanges.