Justice Department investigating collapse of Do Kwon’s TerraUSD stablecoin: WSJ Justice Department investigating collapse of Do Kwon’s TerraUSD stablecoin: WSJ
Former members of Terraform Labs Pte. Ltd. have been questioned by the FBI and the Southern District of New York.
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Updated: Mar. 14, 2023 at 9:40 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The U.S. Justice Department has opened a probe into the collapse of Do Kwon’s TerraUSD stablecoin, according to the Wall Street Journal (WSJ).
The investigation is said to target former team members of Terraform Labs who the FBI and New York officials have questioned in the U.S.
The SEC civil suit includes Kwon, the co-founder, and CEO of Terraform Labs, as a named individual; part of ongoing drama surrounding the South Korean crypto entrepreneur who is now facing criminal charges in the U.S. for the first time.
Charges against Do Kwon in the U.S.
Investigators in the ongoing probe into the collapse of TerraUSD raised questions about the relationship between the South Korean payment app Chai and the underlying blockchain created by Terraform Labs to support the stablecoin, according to the WSJ.
The SEC alleged that Do Kwon misled the public by claiming that Chai transactions were processed on Terraform’s blockchain, when in reality, Chai used more conventional technology.
An attorney representing Do Kwon and Terraform stated in court that they plan to seek the dismissal of the SEC’s lawsuit — including allegations that they misled investors and sold unregistered securities.
Kwon previously denied any wrongdoing and, in a previous interview with the WSJ , expressed his belief in TerraUSD and noted that he personally suffered losses as a result of its collapse.
It is currently unknown what specific charges the Justice Department is pursuing in relation to the collapse of TerraUSD.
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Dorian Batycka
Dorian Batycka is a journalist interested in art and technology. He has previously contributed to CoinDesk, Decrypt, Artforum, Artnet News, the Art Newspaper, and many others. He can be found on Twitter and Instagram @temp_projects, where he often memes his way through current financial and art news, scandals, and events.
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Terra (LUNA) is a public blockchain protocol that emerged from Terra Classic.
Terraform Labs
Terraform Labs is a startup that created Terra, a blockchain protocol and payment platform used for algorithmic stablecoins.
Do Kwon began his professional journey as an engineer, contributing to tech giants Apple and Microsoft.
