Seoul Police Launch Investigation Against Terraform Labs Employee

The Seoul Police Department has initiated an investigation against one of the Terraform Labs employees.The agency is checking information regarding the potential theft of corporate funds, reports the Financial Times. 

South Korean media company Chosun Biz leadssimilar information, referring to the Department's report. According to the publication, the police emphasized that the investigation is not directly related to the head of the company, Do Kwon.

Chosun Biz said that we are talking aboutincident that occurred in May 2021. The authorities managed to freeze the cryptocurrency, which the suspect transferred to the platform of one of the local exchanges. The amount of stolen funds was not disclosed.

According to the FT, the Seoul Southern District Prosecutor's Office was also interested in Terraform Labs. The agency received two collective complaints signed by a total of 81 investors.

The plaintiffs allege that “the founders of Terraform Labs and the company itself misled contributors about defective algorithmic coins.”

“We are investigating the case because people have filed complaints against the founders, accusing them of fraud and violation of financial regulations,” said a representative of the prosecutor’s office.

Terraform Labs co-founder Daniel Shin inSpeaking to the FT, he denied any allegations of fraud. According to him, the company had no intentions to deceive investors - it “just wanted to introduce an innovative payment settlement system.” 

Shin added that the project team was not aware of the flaws in the TerraUSD algorithm and did not try to manipulate prices.

Terra's Death Spiral: How and Why LUNA and UST Failed

Earlier, information appeared in the media that to investigate the collapse of the Terra ecosystem, the South Korean authorities recreated an interdepartmental group that was disbanded more than two years ago. 

Let us recall that in May, journalists also reported on inspections of Terraform Labs employees by South Korean law enforcement agencies as part of the investigation into the collapse of Terra.