The CEO of Terraform Labs is facing possible criminal charges in the wake of two leading cryptos collapsing earlier this month.
In a new report, Yonhap News says that South Korean authorities are considering bringing Ponzi scheme charges against Do Kwon, the founder of Terra (LUNA) and algorithmic stable coin TerraUSD (UST), both of which have plummeted by over 99.99% recently and causing losses of around $40 billion.
At issue is the Anchor Protocol, a decentralized finance (DeFi) platform built on top of the Terra ecosystem’s blockchain, which offered investors of UST returns of approximately 20%.
The report says that the Financial and Securities Crime Joint Investigation Team will investigate the case, and quotes one member of the prosecutor’s office as saying,
“Kwon’s remarks promising returns could provide a key clue.”
Do Kwon and fellow Terraform co-founder Daniel Shin are also being sued by five investors who claim to have lost $1.1 million due to “fraud and other financial irregularities,” says the report.
At time of writing, Terra is worth a tiny fraction of the $80 price tag it held just weeks ago, currently trading for $0.000131.
While TerraUSD did briefly recover to the $0.25 level back on May 14th, the crypto asset has been steadily falling from its weekly high of $0.11 this past Monday.
UST is down 19.25% over the last 24 hours and priced at $0.063425.