Legal troubles mount for Terraform Labs as Seoul police investigative
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South Korean authorities are currently investigating Terraform Labs and its employees on several charges including tax evasion and market manipulation.
Terraform Labs, the parent company behind the collapsed Terra ecosystem, is currently under multiple investigations from the South Korean authorities.
The latest investigation revolves around the alleged embezzlement of Bitcoin (BTC) from the company’s treasury. According to a report published in a local daily, the Seoul Metropolitan Police Agency received an intelligence tip last month informing them of possible embezzlement of BTC by one of the employees of the firm.
The police stated that the investigation into the alleged embezzlement of BTC from the company’s treasury had no direct connection with tainted co-founder Do Kwon, and they are investigating individual embezzlement charges at this point.
Authorities managed to freeze the stolen funds with the help of a crypto exchange until the investigation is complete. However, the amount of the stolen funds hasn’t been disclosed.
The Luna Foundation Guard (LFG), a fund set up by the company that held over $3 billion in Bitcoin reserves, became the focus of interest in the aftermath of the collapse. The BTC fund was used to help balance the algorithmic stablecoin TerraUSD Classic (USTC). The firm claimed all its BTC reserves were used in a futile attempt to stabilize USTC.
In a recent interview with the Financial Times, Terraform Labs co-founder Daniel Shin denied any allegations of malpractice or fraud. He said:
“There was no intention of deception as we just wanted to innovate the payment settlement system with blockchain technology.”
South Korean authorities have launched a full-scale investigation into the recent collapse of the Terra ecosystem and the role of Terraforms Labs employees and co-founder Do Kwon.
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