Hooyeon Kim
South Korean prosecutors are stepping up their investigation into Terraform Labs, whose stablecoin TerraUSD collapsed in May, setting off a rout in cryptocurrency markets.
A team of investigators from the Seoul Southern District Prosecutors Office began seizing transaction records and other material from seven local exchanges at 5:30 p.m. local time on Wednesday, the office said in a message.
Prosecutors also conducted raids on eight other places, including the homes and offices of people who are under investigation. The office declined to provide more information on those raids, citing investigation security.
TerraUSD crashed from its dollar peg in early May when the complex algorithm-based system involving the sister Luna token that was meant to safeguard the peg failed to work as planned. The implosion rendered Luna almost worthless.
Read more: SEC Investigating UST Stablecoin Blowup in Fresh Threat to Terra
Some Luna investors a complaint with South Korean prosecutors in May, alleging Terraform Labs founder Do Kwon and his company had committed fraud and engaged in illicit fund-raising.
Yonhap News Agency reported earlier that payment app Chai Corp. was among companies being searched, along with local crypto exchanges such as Upbit, Bithumb, Coinone as well as unidentified venture capital funds that invested in the Terra blockchain project.
Spokespeople for Upbit, Bithumb and Gopax confirmed that raids took place Wednesday evening at their offices, and that prosecutors seized transaction records. Chai and Coinone didn’t immediately respond to requests for comment.
In June, authorities current and former employees of Terraform Labs from leaving the country. KBS TV reported that prosecutors had summoned a former official at a unit of Terraform Labs, while Yonhap prosecutors were probing whether Kwon evaded taxes by moving profits from cryptocurrency transactions to an offshore account.
— With assistance by Sangmi Cha
