South Korean Exchanges Face Heat Over Terra Collapse, Police Asks to Freeze All LFG Funds
It seems that the South Korean regulators and investigative agencies have stepped up measures on investigating local exchanges on the recent collapse of the Terra ecosystem.
As per reports from local news publication, the ruling party in South Korea is having an urgent meeting today, May 24, will officials from the states having the top five largest crypto exchanges. These officials are likely to investigate crypto exchanges such as Upbit, Korbit, Coinone, Gopax, and Bithumb.
The officials are likely to go to the roots of what led to the $40 billion loss of the Terra ecosystem. The report indicates that the exchanges will likely be held responsible for the damages suffered by investors. The officials believe that the exchanges failed to implement enough investor protection to prevent clients’ losses. Report suggests that high trading volumes and transaction fess encourage the exchange to continue trades for UST and LUNA despite client risks.
Yoon Chang-Hyeon, chairman of the South Korea’s parliament’s special virtual assets committee, said: “we will check [the exchanges’] investor protection measures. The people’s strength virtual asset special committee will investigate exchanges’ investor protection policy.”
Last week, Chang-Hyeon called for an urgent meeting of the National Assembly to investigate the Terra crash. As per the report, Terra founder Dot Kwon has been also invited to attend the meeting. Besides, the Southern District Prosecutors are also investigating Do Kwon for any possible Ponzi maneuvers.
The Seoul metropolitan police department has swung into action and issued notices to all crypto exchanges running in the country. In the notice, the Korean police has asked exchanges not to release any funds associated in any form with the Luna Foundation Guard (LFG).
As per fresh insights, the police claims that the LFG might have embezzled the company’s funds in its attempt to prevent the Terra network from collapsing.
The collapse of the Terra ecosystem has moved the market and the entire crypto community. It has also drawn the attention of some of the top executives from the financial world.
Speaking at the World Economic Forum at Davos on Monday, May 23, IMF chief Kristalina Georgieva said: “The less there is backing it, the more you should be prepared to take the risk of this thing blowing up in your face”.
However, Terra has $3.5 billion worth of BTC as a reserve for its UST stablecoin but that didn’t seem enough.