Korean prosecutors investigating a case of fraud linked to the collapse of stablecoin protocol LUNA and its sister-asset TerraUSD (UST) have raided seven crypto exchanges in the country, reports Yonhap News Agency.
Authorities from the Seoul Southern District Prosecutors Office swooped on Coinone, Upbit, Bithumb, and four local exchanges, as well as homes and offices of related suspects on Wednesday.
Investigators seized transaction records and “other materials” in a bid to uncover whether the coin’s demise was in fact caused intentionally by Terraform Labs (TFL) CEO Do Kwon.
UST and Luna investors filed complaints against Kwon, whose tax records were seized by investigators last month, and TFL co-founder Daniel Shin back in May. They want answers about the billions of won lost when both coins went under.
Korean authorities say they’ll examine the seized materials and question witnesses before making a decision.
UST may be dead but the legal issues just keep coming
The controversies and legal wranglings surrounding the protocol’s spectacular implosion continue to stack up.
Back in June, Binance US and its CEO Brian Schroder were hit with a class-action lawsuit by a group of investors who claimed the exchange falsely advertised UST as “safe.”
At around the same time, rumors started to swirl that Kwon had used Abracadabra’s Degenbox protocol to cash out somewhere in the region of $3 billion in crypto in the run-up to the coins’ collapse.
And also in June, Kwon, along with a number of crypto companies, including Terraform Labs, Three Arrows Capital, and Jump Crypto, were targeted by another lawsuit claiming they broke federal securities laws and lied to investors about the tokens’ stability.
Specifically, it’s alleged that the defendants failed to register LUNA and UST as securities with the SEC, made a series of misleading statements to lure investors into buying at inflated rates, and fraudulently claimed that reserves were sufficient to “defend the peg” and maintain interest payments.