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TerraUSD Co-Founders Face Lawsuit Over $40bn Crypto Collapse

The LKB & Partners law firm filed a lawsuit against Terraform Labs co-founders Do Kwon and Daniel Shin, the Seoul-based Munwha Ilbo newspaper reported


Prosecutors in Korea have blocked the TerraUSD developers from leaving the country while inquiries proceed into the huge crypto collapse, a new report says.
Prosecutors in Korea have blocked Terra developers Daniel Shin, left, and Do Kwon, from leaving the country while they investigate the crypto collapse. Photo: Terraform Labs.

 

A South Korean law firm is gathering information from investors crippled by the TerraUSD and Luna cryptocurrency meltdown earlier this month.

The LKB & Partners law firm filed a lawsuit against Terraform Labs co-founder and chief executive Do Kwon and cofounder Daniel Shin, the Seoul-based Munwha Ilbo newspaper reported.

Kim Hyeon-kwon, an attorney at the law firm, submitted the complaint to the Seoul Southern District Prosecutors’ Office, alleging fraud and fundraising without approval, South Korea’s Yonhap News Agency reported.

Investors are believed to have lost more than $40 billion after TerraUSD became untethered from its 1:1 US dollar peg. Just one crypto exchange, Binance, reportedly lost $1.6 billion.

 

ALSO SEE: Trash-Talking Crypto Whiz Created $40bn Crash – NYT

 

Terraform Dissolved Days Earlier

The law firm is soliciting information from alleged victims on its website. A questionnaire seeks a claimant’s name and contact details, as well as the type of crypto investment, date and amount of purchase.

Yang Jae-sok, a legal assistant at the firm, told Asia Financial the company had not yet decided if it would pursue cases for losses by non-Korean citizens.

Official records show Do Kwon dissolved Terraform just days before the TerraUSD stablecoin collapsed, according to Bitcoin News.

The collapse of TerraUSD and an associated crypto token called Luna has called the $180 billion stablecoin market into question.

“A stablecoin known as TerraUSD experienced a run and declined in value,” US Treasury secretary Janet Yellen said last week. “I think that this simply illustrates that this is a rapidly growing product and there are rapidly growing risks.”

 

  • George Russell

 

 

 

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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