Following the stunning collapse of TerraUSD (UST) last week, LKB & Partners, one of South Korea’s top law firms, has decided to prosecute Terraform Labs founder and CEO Do Kwon. Korean media released the announcement on Wednesday.
LKB will launch a complaint against Kwon, a Korean national, on behalf of regular investors with the Seoul Metropolitan Police Agency as per the article in the Munhwa Ilbo daily. Additionally, according to the article, several of LKB’s workers may join the action because they lost money in the UST collapse.
Kim Hyeon-Kwon, a partner at LKB, claims that there are connected investors within the law firm. In addition, he says there will lodge a claim against Kwon with the Seoul Metropolitan Police Agency’s Financial Investigation Unit.
According to the statement, in addition to submitting a police complaint, LKB has plans to file a provisional attachment order of Kwon’s properties in the Public Prosecutors’ Office of Seoul Southern District to take them.
LKB is contemplating suing Daniel Shin, another Terra co-founder, according to a second story from Korean news outlet Yonhap.
Last week, the UST algorithmic stablecoin de-pegged dramatically, falling under 10 cents, even below its goal price of $1. That price is still in effect. Luna, Terra’s native token, has likewise fallen and is now worth a fraction of a cent, having lost nearly all of its value.
The failures of UST and Luna resulted in tens of billions of dollars in losses for traders and investors. The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) in Korea have purportedly initiated “emergency checks” into local crypto exchanges in order to improve investor protection.
Yun Chang-Hyun, a Korean politician, is said to have urged a parliamentary hearing on UST to learn more about the cause of the collapse and how to safeguard investors. Kwon and local crypto exchanges are invited to the hearing, according to Chang-Hyun.
Terraform’s in-house legal staff has left the company following the UST debacle, according to The Block. To help with legal concerns, the Singapore-based firm has hired outside counsel.
In the meantime, Terraform is working to improve the problem. Kwon has proposed forking Terra to build a new blockchain, but the community appears to be opposed to the concept.
Additionally, The LUNA issue has generated a commotion in the cryptocurrency market, prompting South Korean financial regulators to initiate an investigation into the circumstances surrounding the LUNA crash. The goal is to give clarity to the future of stablecoins while also safeguarding investors’ interests. Local sources estimate that roughly 280,000 Korean traders have invested in TerraUSD and LUNA in domestic markets.
The investigation will focus on determining what Terra and LUNA are, determining whether they are in compliance with financial regulations, determining how and why the value was lost, determining what, if any, responsibility the Terra Foundation bears, and offering suggestions for avoiding future scenarios.