The prosecutor suspects Do Kwon of creating a financial pyramid

The CEO of Terraform Labs may face criminal charges in connection with the collapse of two leading cryptocurrencies at the beginningthis month.

Now the prosecutor's office of South Korea is studying the issue ofthat is, whether to charge CEO Do Kwon of Terraform Labs with fraud in organizing a financial pyramid. A day earlier, investors sued him because of the collapse of two of the company's cryptocurrencies.

According to CoinGecko, as a result of the collapse of twoTerraform's main token TerraUSD and the Luna coin fell over 99.99% from their highs, resulting in investors losing more than $38 billion in a week.

The authorities said that about 280,000 investors are holding about 70 billion Luna coins, while the exact size of the damage remains unknown.

On Thursday, five South Korean investors filedcriminal lawsuits against Kwon and co-founder Daniel Shin on charges of fraud and other financial misconduct, stating that their combined damages amounted to 1.4 billion won ($1.1 million).

The prosecutors in charge of the case also find out if they canthey will file a pyramid scheme case against the Anchor Protocol project, in which they promised TerraUSD investors a 20 percent annual return.

On Friday, the Seoul Southern District Attorney's Office referred the case to the Joint Securities and Financial Crime Investigation Unit.

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