South Korean prosecutor’s behind Terraform Labs investigation have reportedly conducted a search-and-seize operation in 15 firms, seven of which were crypto exchanges.
A Wednesday report by News1 Korea states that the Seoul Southern District Prosecutors Office has established the Joint Financial and Securities Crime Investigation Team. raided The offices of Upbit (formerly UST), Coinone, Korbit, Korbit, and Copax were among those affected by the collapse of Terra. Authorities reportedly obtained data related to TerraUSD (formerly UST) and Terra (LUNA) — now Luna Classic (LUNC) — transactions, in which roughly 200,000 Korean investors suffered losses following the tokens’ severe price devaluation and subsequent collapse in May.
Some of the victims of Terra’s collapse and UST’s depegging reportedly appointed local law firm L.K.B. & Partners to represent them in a suit against Terraform Labs and its co-founder Do Kwon, alleging that the company committed fraud. According to reports, more than 100 people filed complaints with the prosecutors for losses of approximately $8 million.
“The defendants did not properly inform about design errors and defects in the algorithm while designing and issuing Luna and Terra coins in a collusion to attract investors,” said a spokesperson from L.K.B. & Partners.
Following the collapse of UST and LUNA, South Korea’s national tax agency reportedly hit Terraform Labs and Kwon with a $78 million penalty related to tax evasion. Lawmakers in the country also called Kwon to speak at a parliamentary hearing regarding the events around Terra’s collapse and UST’s depegging.
Related: Korean exchanges agree upon an emergency system for Terra-style collapse
Though headquartered in South Korea, Terraform Labs and the events surrounding its tokens’ collapse have had wide-ranging implications for the crypto space. Investors in the United States who were affected by the UST/LUNA fallout suggested that they might file legal action against Stablegains, a yield generation application. They were accused of having lost $44 million worth deposited funds.