On May 23rd, 2022, Korean authorities sent a request to the top crypto exchanges in the country to prevent funds from being withdrawn. Specifically, the Seoul Metropolitan Police Agency asked to prohibit the Luna Foundation Guard from taking any action. The police claim that clues have been found that may link the organization to embezzlement.
The Luna/Terra algorithmic stablecoin crash, which reduced the value of the coin by over 99%, crushed investor portfolios overnight earlier this month.
However, this request is not a demand and is not enforceable by law. Each exchange can choose how they would like to respond, but it is not yet known how they will react.
Several prominent Korean investors requested that Do Kwon, CEO of Terraform Labs, be investigated and sued for the collapse of the UST stablecoin. This triggered the revival of the “Grim Reaper,” a Korean Financial and Securities Crime Joint Investigation Team.
Korean legislators have gone as far as meeting with executives from each of these exchanges, including Upbit, Bithumb, Coinone, Korbit, and Gopax. Because they are not required to comply, this meeting is likely a move to put pressure on the heads of these exchanges.
According to Newspim, Yoon Chang-Hyeon, chairman of the People’s Strength Virtual Assets Special Committee, said on Facebook, “We will check the exchange’s investor protection measures.”
Related: Terra crash not a risk to the broader crypto ecosystem, says Huobi Global co-founder
It is reasonable to expect that the representatives from the exchanges will be held accountable, in some way, for the damage caused to investors by the LUNA crash, reported the outlet. Newspim also reported that the Korean National Assembly is taking the initiative to regulate punishment in this matter.
Two of the exchanges had already issued warnings on their websites, Coinone has already halted the trade of LUNA as of May 11th, and Binance had also suspended some spot trading.
Although this official report joins the broader developing story, the request to the crypto exchanges and the Do Kwon investigation are not linked. The actions by the National Assembly and the Korean authorities make it clear that Korea is willing to take the necessary steps to get to the bottom of the Terra ecosystem collapse imbroglio.