South Korean investors, lawyers, and government officials are demanding answers from Terraform Labs’ Do Kwon and its co-founder Daniel Shin.
A law firm in the country is reportedly planning to sue both Terra chiefs for millions of dollars lost in recent weeks, when its Terra (LUNA) token plummeted, causing its stablecoin TerraUSD (UST) to unpeg from the US dollar.
Executives at LKB & Partners, a Seoul-based law firm established in 2012, told local newspaper Munhwa Ilbo a lawsuit was imminent.
Partner attorney Kim Hyungwon told reporters that several of the law practitioners at the firm were investors themselves.
“We plan to file a complaint against CEO Kwon at the Financial Investigation Unit of the Seoul Metropolitan Police Agency,” he told reporters.
The lawsuit would be the first filed against Kwon over the fallout of Singapore-based Terraform Labs.
- UST was meant to maintain a peg to the US dollar through a series of algorithms, rather than a 1-1 backing in reserves.
- Its reliant token LUNA nosedived rapidly from an all-time-high of $116 on April 6 to $0.0002 on May 18.
- UST was last worth $1.00 on May 7. Now, it’s a measly $0.10.
South Korean MP wants to summon Kwon to a hearing
The stablecoin’s demise has also prompted members of a South Korean conservative party to propose a hearing with Kwon to get answers on investor protection. Local paper NewsPim reported the issue was raised during a plenary meeting of the South Korean National Assembly’s Political Affairs Committee on Tuesday.
“Investor loss is growing while legislation is delayed,” Rep. Yoon Chang-hyeon of the People Power Party said in a bid to question Kwon (translated from Korean).
Both the potential lawsuit and government summoning herald future trouble for Kwon, yet it remains to be seen if either come to fruition.