South Korea’s Financial Services Commission (FSC) Chairman Koh Seung-beom told the National Assembly earlier this week that around 280,000 investors hold about 70 billion LUNA in South Korea alone, the blog reports forcast Some investors poured huge sums of money into the project because they believed in the company’s success. Now they have lost everything and suffered losses in the millions. The hard fork proposed by Do Kwon was not accepted by the community. But on the contrary.
On May 13, victims had on the online platform Cafe Naver opened a chat room for Terra LUNA investors who had suffered losses. Over 2,100 investors have signed up to the South Korean online community Terra Luna Coin Victims signed up to discuss possible damages and even revenge.
An online community administrator then began recruiting investors to join a class action lawsuit against the two co-founders of Terra. They are sure that LUNA is one fraud deal and that Kwon has been planning a liquidation since 2021.
Lawyers are investigating the incident
The local law firm LKB & Partners, whose employees were also apparently invested in Terra, then made the decision to file a lawsuit and request property confiscation. The law firm intends to submit the applications to the Seoul Metropolitan Police Agency’s Financial Crimes Task Force and the Seoul Procuratorate.
The only question is whether there is any legal basis for the lawsuit at all. But voices from the crypto community speak of fraud and negligent action. Jeremy Allaire, CEO of Circle, which issues second-largest stablecoin USDC, claims to have foreseen the collapse of Terra and algorithmic stablecoin UST four months ago. Speaking to Bloomberg Crypto, he said:
We’ve been looking very closely at the Terra ecosystem and for the past six months have felt that it’s a house of cards that poses a very high risk. There were several scenarios where we could see it going into a death spiral. That’s exactly what happened.
Jeremy Allaire, CEO of Circle
Also targeting co-founders of Terra Labs
The law firm is also reviewing lawsuits against Shin Hyun-seung, co-founder of Terraform Labs, who says he left the project in 2020.
Chai Corporation, a South Korean payments company where Shin serves as CEO, informed users on its website that it is not affiliated with Terraform Labs and related cryptocurrencies.
Kwon also suspected of tax fraud
According to local media reports, Terra founder Do Kwon has also come under the spotlight of the South Korean tax authorities. The news medium Edaily writes that Kwon faces a 100 billion won (about US$78 million) fine for alleged tax evasion.
South Korean authorities are said to have determined that Terraform Labs is a “local company” in South Korea. However, the company is registered in Singapore and the Virgin Islands. For taxation, however, it should be decisive where a company makes its decisions and not where the formal company headquarters are located.
Shortly before the Luna crash, it was confirmed that [Do Kwon] attempted to liquidate a domestic company and relocate abroad, raising suspicions that he was trying to avoid taxes.
Do Kwon’s actions suggest fraudulent intent. However, it is not yet possible to verify which allegations are actually true.