Following the collapse of two major cryptos earlier this month, the CEO of Terraform Labs could face criminal charges. According to a new report from Yonhap News, South Korean authorities are considering filing Ponzi scheme charges against Do Kwon, the founder of Terra (LUNA) and the algorithmic stable coin TerraUSD (UST), both of which have recently plunged by over 99.99 percent, causing losses of around $40 billion.
The Anchor Protocol is the challenge at stake, a decentralized finance (DeFi) platform developed on top of the Terra ecosystem’s blockchain that promised UST investors returns of around 20%.
The Financial and Securities Crime Joint Investigation Team will probe the situation, according to the report, which quotes a prosecutor’s office official as stating.
“Kwon’s remarks promising returns could provide a key clue.”
Five investors have sued Do Kwon and fellow Terraform co-founder Daniel Shin, alleging that they lost $1.1 million due to “fraud and other financial irregularities,” according to the report.
The legal action against Kwon comes after the Luna Foundation Guard (LFG) dumped billions of dollars in Bitcoin (BTC) in an attempt to save UST when it was de-pegged from the US currency.
Terra is currently trading at $0.000132, a fraction of the $80 price tag it had two weeks ago. While TerraUSD briefly recovered to $0.25 on May 14th, the crypto asset has been progressively declining after hitting a weekly high of $0.11 at the start of the week.
UST is now trading at $0.06699, down 15 percent in the last 24 hours.
