It has been confirmed that the South Korean authorities have launched a full-scale investigation into the collapse of the Terra blockchain, which resulted in the crash of its two digital currencies, TerraUSD (UST) stablecoin and Terra (LUNA).
The joint financial and securities crime investigation team of the Seoul Southern District Prosecutors’ Office summoned all present and past employees of Terraform Labs, the firm behind the development of LUNA and UST stablecoin.
Do Kwon Was Warned Against Launching Terra (LUNA)
According to the report, the employees that were invited are known to be involved in the development of Terra blockchain since 2019.
In the course of the investigation, a statement says there was an opinion against the launch of Terra (LUNA) because the pilot model failed even within the company at that time.
An employee said, “Even at that time, there was a warning inside that there could be a collapse at any time, but CEO Kwon Do-hyeong forced the coin to be launched.”
The statement reads further, “If you pay interest of several tens of percent to investors without a stable collateral or profit model, people may flock to you at the beginning,” but “at a certain point in time, it has no choice but to collapse because it cannot handle interest payments and fluctuations in value.”
The report also revealed that another digital currency codenamed ‘Basic Cash’, developed by Terraform Labs with a similar structure to Terra (LUNA), also crashed sharply within two or three months of its launch after the initial price surge.
However, CEO Do Kwon did not learn from these signs of failure. He went ahead with the launch of Terra (LUNA) using a failed model.
Investigation into Possible Terra (LUNA) Price Manipulation
The report added that the South Korean authorities are also investigating a possible international price manipulation or whether Terra (LUNA) went through a proper listing review process with domestic crypto exchanges before it was listed.
It’s also noted that investors that were affected by the crash have been filing complaints again Do Kwon since the historic incident occurred.
According to the report, the number of victims who have filed a complaint now stands at 76 and the amount of losses is relatively 6.7 billion won at the moment.