Jakarta –
Do Kwonfounder of stablecoins TerraUSD (UST) and tokens Lunathreatened to face lawsuits in South Korea after the value of the two coins plummeted and cost investors billions of dollars in no time.
The Seoul Southern District Prosecutors’ Office said it had launched an investigation into Terraform Labs, the organization behind the Terra stablecoin project led by Do Kwon.
The announcement comes a day after five Korean crypto investors filed a lawsuit against Kwon and Terraform Labs co-founder Daniel Shin for alleged fraud and other breaches of financial regulations. The five investors suffered a total loss of 1.4 billion Won (Rp 16.1 billion).
South Korean financial authorities estimate that there are about 280,000 users who own about 70 billion Lunas in Korea.
“Design and publishing Luna and Terra to attract investors, but failure to properly inform them of its shortcomings, and Luna’s unlimited publishing expansion is tantamount to defrauding investors,” said a representative from LKB & Partners, the law firm representing the five investors, as quoted by TechCrunch, Saturday. (21/5/2022).
Do Kwon is also reportedly facing a fine of USD 100 billion for evading the payment of income and corporate taxes.
Prior to the decline, UST was predicted to be one of the most promising stablecoins. Unlike other stablecoins whose value is pegged to fiat money or other tangible assets, the value of UST is maintained by ‘burning’ Luna which is its sister token.
Luna’s own value plunged 99% in a short period of time and UST’s market capitalization plunged from USD 19 billion to less than USD 1 billion. On May 13 yesterday the value was only USD 0.000102 or around Rp. 1.7. Even though at its peak in the month of April, Luna’s value had touched USD 119 per coin.
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