Tag: Ust

Terra’s Do Kwon Says He is Cooperating With Prosecutors in New Interview

by Blockchain News

In what appears to be the longest interview session Do Kwon has had since the collapse of Terraform Labs and its associated tokens LUNA and UST, founder, Do Kwon, has granted over an hour of an interview to crypto Journalist and host of the Unchained Podcast Laura Shin.

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In the interview, Kwon said he is currently cooperating with South Korean regulators but has not felt the need to turn himself in as he has not seen an arrest warrant from the prosecutors yet.

 

“We haven’t seen a copy of the arrest warrant so every piece of data we are consuming is from the media,” Kwon said, affirming that all of the document requests he has been served has been treated.

 

One of the most important talking points with Shin was the remorse he felt for the whole collapse of the protocol. He emphatically said he was “sorry” about how everything went down and said he believes every investor in the LUNA and UST believed his assertions that the algorithmic stablecoin can be kept stable.

 

Kwon said he believes the accusations of fraud and scams are unwarranted and that every investor deserves to know what really transpired. He said he understands that it is very difficult to leave with immense losses and that is part of what breaks him the most.

 

The embattled developer said besides the collapse of the LUNA and UST tokens and the ecosystem that was built around the coins, he has contributed positively to the growth of the crypto ecosystem in the five years he has been a leader in the space.


Despite the more than an hour interview, Kwon did not disclose his location, and besides South Korean prosecutors that are on the hunt for him, Interpol has also issued a Red Notice for him, making him one of the most wanted humans alive.

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South Korean Watchdogs Request Interpol’s Red Notice against Do Kwon

by Blockchain News

The controversy surrounding Do Kwon’s whereabouts continues to grow, given that South Korean prosecutors asked Interpol to issue a red notice against the Terraform Labs’ founder. 

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The Seoul Southern District Prosecutor’s Office had aired its tribulations about Kwon’s noncooperative nature and that he did not intend to show up for questioning. 

“Prosecutors have made a request to Interpol for their assistance to locate Kwon, whose whereabouts remain unknown and to have him handed over to Korea,” the Prosecutors office said, adding that “Currently, we are in the process to locate the whereabouts of suspect Do Kwon and apprehend him,” a prosecution official added.

Over the weekend, Do Kwon insisted that he was not on the run and tweeted:

“I am not ‘on the run’ or anything similar – (from) any government agency that has shown interest to communicate, we are in full cooperation, and we don’t have anything to hide.”

Following the collapse of Terraform Labs’ native tokens UST and Luna in May, the crash triggered a $60 billion crypto meltdown. As a result, South Korean authorities have been pursuing him to get to the bottom line of the matter.

Recently, Seoul Court issued an arrest warrant for Do Kwon and five others for violating the nation’s capital markets law, Blockchain.News reported. 

Furthermore, various lawsuits against Kwon have emerged from investors in different countries.

A red notice issued by Interpol requires law enforcers globally to restrict persons from undertaking cross-border travels and being issued with visas. Moreover, it guarantees the provisional arrest of an individual pending surrender or extradition.

Kwon had initially travelled from South Korea to Singapore, given that Terraform Labs had a base at the latter. Nevertheless, his whereabouts remain scanty because the Singapore Police force hinted that Kwon was not in the nation.

LUNA sent shockwaves to the crypto market after collapsing to near-zero overnight despite it being among the top ten cryptocurrencies in May. 

Things started going south when the algorithmic UST stablecoin on the Terra network experienced a free fall to the extent that leading crypto exchange Binance temporarily halted its withdrawals together with that of LUNA.

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Korean Prosecutors Consulting if LUNA Classified “Security”

by Blockchain News

The probe into Terraform Labs by South Korean prosecutors is taking a whole new twist as watchdogs are making consultations on how best to classify the collapsed LUNA tokens – now known as Luna Classic (LUNC).

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As reported by the Korean Herald, the Seoul Southern District Prosecutors Office’s Financial and Securities Crime Joint Investigation Team is consulting with industry stakeholders to determine the best designation for LUNA coins. Should the consultation lead to the recognition of the coin as a security, it will complicate the ongoing case for Terraform Labs as it will now also be violating the Capital Markets Act.

The collapse of Terraform Labs’ associated tokens, including LUNA and the algorithmic TerraUSD (UST) stablecoin back in May effectively ushered in the first wave of the crypto winter. With the plummeted prices, companies who had exposure to the assets suffered such financial challenges that many, like Three Arrows Capital (3AC), could not recover from.

Besides corporate startups who went bankrupt on exposure to the LUNA tokens, retail investors also suffered a tremendous amount of loss. In Korea alone, as many as 270,000 investors had exposure to LUNA and UST, with most ending in losses at this time.

According to the Korean Herald, South Korean prosecutors are broadening their investigations into the company. This move has stirred targeted raids on the home premises of Terraform Labs Co-Founder Daniel Shin as well as those of trading platforms that are suspected to have dealings with the now defunct company.

With more details still required by the prosecutors, there is no doubt that Do Kwon and Terraform Labs will face some reprimand. For now, however, Kwon’s whereabouts seem to be staling the process, but the prosecutors have issued a standing that will alert them once Do Kwon sets his feet on Korean shores.

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Binance.US Sued for Selling Unregistered LUNA Securities

by Blockchain News

Binance.US has been sued in a class-action lawsuit for selling unregistered security tokens from the Terra blockchain protocol.

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The class-action lawsuit was filed in the Northern District of California, dragging the exchange for misleading investors with the sale of LUNA and UST tokens, both of whose collapse led to the loss of over $40 billion of investor’s money globally.

The lawsuit, filed by the plaintiffs, represented by law firms Roche Freedman and Dontzin Nagy & Fleissig, blames Binance.US’s business model “premised on illegally enabling the sale of unregistered securities to as many US investors as possible, as often as possible.”

The Plaintiffs are asking for a Jury trial where it deems necessary as the exchange was also accused of promoting the airdrops of tokens in a bid to facilitate trading volume.

Since the collapse of UST and LUNA, several groups of investors, including those from South Korea, have been plotting lawsuits as they explore avenues to cut back on their losses, despite the emergence of Luna 2.0. 

In a bid to aid those seeking to explore legal options in pursuit of all parties they deemed guilty in the Terra mishap, Kyle Roche from Roche Freedman posted an update back in May, which seems to have materialized through the lawsuit.

“If you purchased $LUNA or $UST on either @coinbase @krakenfx @binance or @Gemini, please reach out to TerraRecovery@rochefreedman.com. My firm is coordinating an effort to help those who lost funds from the recent collapse of #terra and #luna,” he said in a tweet on May 13.

A Binance.US spokesperson has denied all forms of wrongdoing, noting that the exchange operates within the provisions of existing laws. 

“Binance.US is registered by FinCEN and adheres to all applicable regulations. The spokesperson said that these assertions are without merit, and we will defend ourselves vigorously,” the spokesperson said.

While other exchanges, particularly Coinbase, have also been embroiled in a class-action lawsuit, this filing will be one of the most publicized for Binance.US.

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Do Kwon Denies Allegations of Cashing Out $2.7Bn through DegenBox

by Blockchain News

Do Kwon, the once cherished developer who gained prominence with the rise of Terra Blockchain protocol is now being dragged on Twitter for a series of alleged financial misconducts that possibly led to the collapse of UST and LUNA. 

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According to a Twitter user, FatMan Terra, Do Kwon allegedly used the Abracadabra protocol, DegenBox, to siphon as much as $2.7 billion from the UST and Terra coffers months leading to the eventual collapse of the Layer-1 protocol. According to FatMan, a Terra insider with affiliations to the Terra Research Forum, Kwon exploited the borrowing design of Degenbox and the promise of its high APYs to generate enough liquidity with which he was able to move out the said funds.

Earlier, it was discovered based on the testimonies from unnamed employees of Terraform Labs that Do Kwon cashes out as much as $80 million monthly, typically deployed to dozens of other wallets. The claim from FatMan is a corroboration of these earlier facts, but Do Kwon is denying them all.

Taking to his official Twitter handle, Kwon criticized the allegations levied against him, noting that they all are false. He said his critics pointed out that he sold off all of his holdings before the crash and that he still retains the tokens from the latest LUNA airdrop. He noted that these two claims are highly conflicting.

“To reiterate, for the last two years, the only thing I’ve earned is a nominal cash salary from TFL, and deferred taking most of my founder’s tokens,” in part because he ‘didn’t need it’ and that he ‘didn’t want to cause unnecessary finger-pointing of ‘he has too much’,” he said, debunking the claims of any forms of financial impropriety.

Do Kwon involves a number of legal troubles from both South Korea and US regulators, and amidst all these, he said people should “Please say things that are proven and true..”

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Stablecoins to be Issued by Licensed Banks and Trust Companies in New Japanese Law

by Blockchain News

In a move to protect investors, Japan’s parliament has passed a bill classifying stablecoins as digital money that must be connected to the nation’s currency, yen, or another legal tender. 

The legal framework, which is expected to be rolled out in a year, also stipulates that holders have the right to redeem stablecoins at face value. Per the announcement:

“The legal definition effectively means stablecoins can only be issued by licensed banks, registered money transfer agents and trust companies. The legislation doesn’t address existing asset-backed stablecoins from overseas issuers like Tether or their algorithmic counterparts.”

It seems it’s a race against time for global governments to put up guardrails in the stablecoin arena following the shocking collapse of TerraUSD (UST), which triggered the loss of approximately $60 billion.

 

Things started going haywire after the algorithmic UST stablecoin on the Terra network experienced a de-pegging from its US Dollar benchmark.

 

Some experts like Ransu Salovaara, the CEO of DeFi platform Likvidi, stated that the algorithmic nature of UST could have triggered the crash. 

 

This explains why governments are looking at cracking the whip in the stablecoin space because tokens in this sector have a market value of around $161 billion, according to CoinGecko.

 

Tether (USDT) tops the stablecoin list, followed by Circle’s USD Coin (USDC) and Binance USD (BUSD).

 

Is it the end of the algorithmic stablecoin era?

 

Speaking to CNBC during the World Economic Forum in Davos, Reeve Collins noted that it was both unfortunate and not a surprise that money was lost through the algorithmic UST stablecoin because smart people were trying to peg it to the dollar. 

 

The Tether co-founder added:

“A lot of people pulled out their money in the last few months because they realized that it wasn’t sustainable. So that crash kind of had a cascade effect. And it will probably be the end of most algorithmic stablecoins.”

With algorithmic-based stablecoins being at the experimental stage, volatility becomes inevitable. 

 

Anshul Dhir, the co-founder, and COO of EasyFi Network pointed out:

“Experimental algorithmic stable coins are volatile, and it is believed that it will take some time to find a good algorithmic stable coin. Over a period of time, such programmable money should be possible, which ultimately is the end goal of decentralized finance.”

Therefore, time will tell how things turn out for algorithmic stablecoins moving forward. 

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UK Finance Ministry Proposes Safety Net Measures against Stalling Stablecoins

by Blockchain News

Britain’s finance ministry has announced plans for adapting existing regulations to mitigate any collapse of major stablecoins, like the case of TerraUSD that happened two weeks ago.

In a consultation paper published on Tuesday, the British Treasury Department (the HM Treasury) noted the need to manage risks associated with the failure of a systemic digital settlement asset firm, which could have a broad range of financial stability and consumer protection impacts.

“Since the initial commitment to regulate certain types of stablecoins, events in crypto-asset markets have further highlighted the need for appropriate regulation to help mitigate consumer, market integrity and financial stability risks,” the UK regulator said.

As a result, the finance ministry mentioned that mainstream payment firms, banks, and insurers “must comply with rules which ensure their deposit accounts, policies or services can be transferred quickly to another provider if they go bust, to help avoid panic and contagion in markets.”

The HM Treasury disclosed that further work continues to consider whether bespoke rules are needed for winding down failed stablecoins. The regulator also considers the need to adapt existing legal frameworks to be effectively applied to manage the risks posed by the possible failure of systemic digital settlement asset firms for financial stability.

The British ministry also proposes amending the Financial Market Infrastructure Special Administration Regime, which would give the Central Bank of England powers to ensure continued operations of stablecoin payment services during a crisis.

Regulatory Scrutiny Heightened

The latest development is a continued action by the UK Treasury Department’s plans to regulate stablecoins in light of the mega crash.

The collapse of TerraUSD stablecoin triggered regulators’ concerns in the little-regulated sector. The plunge has strengthened the view that the design of some stablecoins poses serious risks.

The US treasury secretary, Janet Yellen, recently called for stablecoin’s regulation after the de-pegging debacle overtook TerraUSD.

Following the TerraUSD de-pegging fiasco, South Korea also mentioned plans to strengthen stablecoin regulation. South Korean financial regulators are currently conducting an emergency investigation of cryptos to expedite the adoption of the “Digital Asset Basic Act.”

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Proposal to Burn 1.3bn UST Tokens Wins Approval from Terra Governance

by Blockchain News

The Terra governance has approved the proposal to burn a certain amount of TerraUSD (UST) tokens. The tokens were held in the project’s community pool and also deployed for past liquidity on Ethereum.

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The total number of votes favouring the action was 99.3% of the total number. According to CoinGecko, the total number of tokens to be burnt equals more than 1.3 billion UST or around 11% of the existing 11.2 billion UST supply.

The burn will be taken care of by Terraform Labs – Terra’s core development firm – and it will be conducted in two phases, the Terra governance forum revealed.

In the first phase, Terraform Labs will permanently remove about 1 billion UST from the supply chain by sending those tokens from Terra’s community pool to a burn module.

While in the second phase, Terraform Labs’ team will bridge back 370 million UST to Terra from the Ethereum blockchain and destroy them.

The dollar-pegged algorithmic stablecoin UST token plummeted to $0.04 cents earlier in May, representing a  93% drop from its value prior to the fall from dollar parity.

The decision to burn the UST tokens comes following approval by the Terra governance system of the revival plan to re-launch the Terra blockchain and create LUNA 2.0 tokens. However, the controversial algorithmic UST stablecoin will not be a part of the rebirth.

According to Blockchain.News, the collapse of Terra’s native tokens LUNA and UST sent shockwaves to the crypto market as nearly $60 billion was shed off.

Do Kwon, the CEO of Terraform Labs, previously opined that hard forking the Terra blockchain would play an instrumental role in saving the ecosystem.

Therefore, UST will not be integrated into Terra 2.0 because it is regarded as the genesis of Terra trouble based on its algorithmic nature. The report noted:

“It will effectively create a new Terra chain without the algorithmic stablecoin. The old chain will be called Terra Classic (LUNC), and the new chain will be called Terra (LUNA). The chain upgrade will commence a few hours after the Launch snapshot.”

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LUNA Charts a Bullish Course as Crypto Markets Opens Monday With Gains

by Blockchain News

Over the past few weeks, the crypto market has been filled with one form of turmoil or the other, pushing a far bigger onslaught in the cryptocurrency ecosystem.

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The plunge in price across the board has dragged off the combined crypto market cap gains, which slumped below $1.15 trillion in the trailing 7-day period.

At the time of writing, the crypto industry is seeing a massive rejuvenation as traders gear up for what the week holds, especially for retail investors. Amidst this re-awakening, here is an insight into what the coming week may hold for LUNA ahead of the likely protocol forking.

Hopes for a Broad-Based Terra (LUNA) Rebound

LUNA and its associated stablecoin, TerraUSD (UST), were single-handedly responsible for the crash the market experienced in the past days. While both coins have erased more than 99% of their price valuation earlier, there seems to be some recovery for LUNA.

The coin was trading at $0.0001987 on Monday Asia trading section, an almost negligible price compared with its previous all-time high of $119. The coin has added over 70% gains as of the time of writing. While the hope for the recovery to $1 is not why investors seem energized, the news that Do Kwon’s proposal to fork the current chain will eventually pass is driving the accumulation of the devalued tokens.

LUNA holders after the crash are entitled to 10% of the new total supply, and with the snapshots scheduled for Friday, May 27, a lot of people want to get their hands on the coin. This demand is not just driving the coin price at this time but is projected to create a more bullish influence before the week runs out.

Despite the current legal woes surrounding CEO Do Kwon and the Terraform Labs, the community seems to want some form of succour in order to recoup parts of their lost capital when the Terra protocol as we have it now collapsed.

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Prosecutors Investigate Do Kwon with Ponzi Fraud Charges amid Terraform Labs Dissolvement

by Blockchain News

Do Kwon’s scandal seem to be deepening. Prosecutors are investigating whether they will file Ponzi fraud charges against him following the Terra crash, according to The Korea Times. 

This comes a day after LUNA and UST investors filed a legal complaint against Do Kwon and Daniel Shin, the co-founders of Terraform Labs. LUNA and UST are the native tokens of the Terra network developed by South Korean fintech company Terraform Labs.

Having wiped out at least $38 billion of investors’ money in a week, prosecutors in South Korea are delving deeper into the Terra crash. For instance, the Seoul Southern District Prosecutors Office that is leading the case intends to seek the services of an investigation team based on lodged complaints and various factual backgrounds.

Per the announcement:

“Prosecutors in charge of the case are looking into whether they can make a Ponzi scheme case against “Anchor Protocol,” under which depositors of TerraUSD are guaranteed a 20 percent annual return.”

Financial authorities believe 280,000 South Korean investors hold approximately 70 billion LUNA coins, even though the exact amount remains unknown. 

Earlier this week, relevant governmental agencies beefed up crypto exchange inspections to try and unravel what transpired during the crash.

Did Do Kwon dissolve Terraform Labs just days before the crash?

Reportedly, Kwon dissolved Terraform Labs on April 30, just days before the Terra tokens came down with a thud. 

According to Digital Today, based on official documents in the custody of South Korea’s supreme court registry office, the decision to terminate the firm was reached at a general shareholders meeting held on April 30.

Similar sentiments were shared by a Reddit user, who noted:

“KWON-DO-HYUNG is listed in this Korean document as dissolving his company Terraform Labs on April 30th, registered May 4th. The act of dissolving just days before the collapse of UST suggests the intent to eliminate responsibility for the aftermath, which serves as evidence that he knew something was going to happen.”

Moreover, Kwon was recently slapped with a tax evasion fine of $78 million, Blockchain.News reported. 

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