The Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) are reportedly investigating the collapse of algorithmic stablecoin terra usd (UST) and firm Terraform Labs. Anonymous sources say former staff members of Terraform Labs, the company behind the Terra blockchain project, have been questioned by US law enforcement.
Unusual Relationship: Report Claims Terraform Labs and South Korean Payments Firm Chai Are Under US Investigation
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 fraud,” the Department of Justice and the FBI are allegedly investigating Terraform Labs. Alexander Osipovich of the Wall Street Journal reports that people familiar with the matter have detailed that the FBI and the Department of Justice for the Southern District of New York have been questioning former members of the Terraform Labs team.
According to the sources, the Justice Department’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 company Chai. TFL co-founder Daniel Shin created the payment company Chai, and the company has been said to have helped Terra launder funds. Several social media reports have shown that Terraform Labs and Chai had an unusual relationship. In mid-November 2022, it was reported that South Korean investigators were looking into Chai and Daniel Shin.
Osipovich noted that the WSJ has contacted the SDNY DOJ and Terraform Labs, but both have declined to comment. The report also noted that “it could not be known what specific charges” the Justice Department might be pursuing, and the case could be dismissed. Do Kwon’s lawyer and TFL’s lawyer are trying to get the SEC lawsuit dismissed, and Kwon vehemently denies fraud. Kwon has not been active on social media since February 1, 2023.
Currently, the former stablecoin Terra USD (UST), now known as USTC, is trading at $0.023 per unit. Terra’s former native asset LUNA, now known as Luna Classic (LUNC), is priced at $0.00013233 per coin on Tuesday. Additionally, the second iteration of Terra’s native crypto asset, LUNA 2.0, is trading today for $1.42 per unit. TFL CEO Do Kwon used to live 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 will be the outcome of the Justice Department and FBI investigation into Terraform Labs? Share your thoughts in the comments section below.
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