A good two weeks after the collapse of the entire Terra ecosystem, the investigations of the South Korean authorities are intensifying. To take a closer look at the matter, the country’s prosecutors have summoned all Terraform Labs employees for interrogation, according to local TV channel JTBC report. At the same time, a validator of the Terra network has brought explosive notes from the “War Room” of the executive floor of the blockchain project to light.
The legal aftermath of the Terra bankruptcy
The already notorious Terra (LUNA)-Crash is one of the biggest bankruptcies in the history of the crypto industry. All eyes were on Do Kwon at first. But while Kwon has already launched Terra 2.0 to save the Terra ecosystem, the investigations in the Terra case are intensifying. According to reports, the authorities are now investigating the people who worked with Do Kwon on the now worthless “LUNA Classic”.
The Financial and Securities Crime Investigation Unit of the Seoul Southern District Prosecutor’s Office wants to check, among other things, whether there have been intentional price manipulations and whether the tokens have passed through proper admission procedures. Some investigators had concerns about the design of the Stablecoins TerraUSD (UST) and claimed that the mechanism of the Terra token was flawed from the outset.
Doubts within your own ranks and leaked chat histories
One of the interrogated employees of Terrraform Labs has now confirmed the concerns of the investigators in the course of the closer investigations. This comes from a Contribution of the South Korean TV channel JTBC out. He reveals that parts of the team around Do Kwon also had doubts about the design of the TerraUSD (UST) stablecoin from the very beginning. They would have warned the company’s CEO, Do Kwon, in advance that the algorithmic mechanism designed to protect the asset’s peg to the US dollar could eventually fail. But Kwon pushed the introduction anyway.
Even then, there was a warning that there could be a collapse at any time, but CEO Kwon Do-hyeong forced the introduction of the coins.
Employees of Terraform Labs
Recently leaked chat histories from a Telegram group with the name caused even more doubts Terra Rebirth League. In this meeting, the executive floor of Terraform Labs, represented by the validators of the network, exchanged views on the crash of Terra (LUNA) and the topic Terra 2.0 from.
The chat histories reveal great uncertainty and despair on the part of the validators. “Could someone enlighten me what this new version (Terra 2.0) is for or what it does?” that’s what it says. Rohit von Coinbase Cloud writes: “I have never seen so much confusion in something so serious.” And Do Kwon himself also speaks up: “Can anyone summarize the problem? I’m quite confused.”
One of the validators has broken his silence and published the chat histories – on a Blockchainso that they are stored and accessible forever.
Terra 2.0 and new problems
The ongoing investigations could ensure that even less trust is placed in the new Terra 2.0 project. Terraform Labs announced that it will compensate the investors with new LUNA tokens via airdrop – but there can be no question of compensation.
On Twitter, for example, a user writes that he lost $ 300,000 in the Terra crash, but only got back $ 59 in new tokens. Shortly after the airdrop, the price of the new LUNA tokens broke within just 24 Hours by more than 70 percent.
Terraform Labs wrote in a statement about this:
We are aware that some users have received less $LUNA from the airdrop than expected and are actively working on a solution. More information will be provided once we have collected all the data, so stay tuned.
Tweet from @terra_money
What happened to the Terra ecosystem at that time
In the course of a crisis in the overall market, the associated sales and massive LUNA deductions from the Anchor DeFi savings protocol, the UST price moved further and further away from its target price level of one US dollar. In view of the UST crash, panic sales broke out. The market capitalization of Terra LUNA at the beginning of April was still over 40 billion US dollars. Currently, it is $ 840 million.
Due to the collapse, the algorithm generated more and more LUNA tokens to stabilize the ecosystem. As a result, the value of these tokens developed hyperinflationary and rapidly decreased in value. Today, LUNA Classic is only worth $ 0.000108.
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