The nightmare of Do Kwon, founder of the Terra ecosystem (LUNA), seems to have no end. After the stablecoins of his TerraUSD (UST) project lost its parity with the US dollar and the price of his cryptocurrency LUNA practically went to zero, he is being called upon to provide clarification on the collapse by lawmakers in South Korea.
Furthermore, following the project’s demise, the country is also carrying out “emergency inspections” of local cryptocurrency exchanges.
Terra ecosystem collapse
As Cryptheory has been reporting, the Terra ecosystem, especially its cryptocurrency LUNA and its algorithmic stablecoin UST, collapsed in the last week.
UST is no longer traded at US$ 1 and, today, costs around US$ 0.11. Meanwhile, LUNA has moved from an all-time high of around $120 on April 5 this year to the current $0.0001779. That is, the price dropped practically 100% in less than two months.
Faced with this collapse, Do Kwon presented two proposals to save the ecosystem. Both provide for the distribution of tokens to the community and the definitive end of the UST stablecoin.
However, his plans have not been enough to calm the spirits of investors and authorities. After all, after the failure of digital assets, regulators and lawmakers in several countries around the world are warning of the possible risks of digital assets, especially stablecoins.
Call of Do Kwon for clarification
South Korean People’s Power Party representative Yun Chang-Hyun, for example, convened a parliamentary hearing on TerraUSD (UST) following the stablecoin’s demise.
According to local news outlet Newspim, Do Kwon was called to participate in the hearing:
“We must bring officials from related platforms, including CEO of Terra Do Kwon , who has become a recent issue, to the National Assembly to hold a hearing on the cause of the situation and measures to protect investors,” Chang-Hyun said Tuesday. this Friday (17) at a plenary meeting of the Political Affairs Committee of the National Assembly.
Additionally, Chang-Hyun wants local cryptocurrency exchanges to explain their behavior during the crash. According to him, some platforms took longer than others to stop trading:
“Coinone, Korbit and Gopax stopped trading on May 10th. Bithumb on May 11th. But Upbit didn’t stop trading until May 13. Upbit, which was the last to stop trading even after seeing the crash. It is the No. 1 company with an 80% stake. In just three days earned around 10 billion won [US$ 7,8 mil] in commission income,” Chang-hyun added.
‘Emergency inspections’ on exchanges
Meanwhile, South Korean portal Yonhap News Agency reported that local financial regulators are launching “emergency inspections” on local cryptocurrency exchanges. Apparently the aim is to increase investor protection after the collapse of the UST
In this regard, both the Financial Services Commission of Korea (FSC) and the Financial Oversight Service (FSS) are asking exchanges to share information about UST and LUNA transactions.
Requests include trading volumes and the number of relevant investors. Still, the agencies asked the platforms to provide their measures in response to the crash and their analysis of the case.
“Last week, financial authorities asked for data on the amount of transactions and investors and evaluated the relevant measures of exchanges. I think they did this to outline measures to minimize harm to investors in the future,” a representative for an unnamed South Korean exchange told Yonhap.