The cryptocurrency crash created a stir in the industry, and revealing documents come to light. Was it a Ponzi scheme?
The fall of LUNA and UST that began weeks ago in successive days that shook the market, led to a collapse unprecedented in this new ecosystem.
The crash of digital assets TerraLabs It is the result of the combination of a crisis in the stock market -after the decision of the Federal Reserve (Fed) of raising the interest rate – and the panic generated by the UST stablecoin parity loss from May 8.
Given this situation, more than one injured party has already begun the search for some type of solution that, in some way, return part of what was lostfrom retail investors to the South Korean government itself.
LUNA and UST, belonging to the Terra network, were the hardest hit in the cryptocurrency market
Did Kwon dissolve Terra before the fall?
Now, a new event adds fuel to the fire by revealing that an important business part of Terraform Labs would have been dissolved days before the collapse by its founder, Do Kwon.
This is revealed by released legal documents, which describe the liquidation of two South Korean offices belonging to the company in the days before the crash of UST and LUNA.
The information collected by the country’s Supreme Court Registry Office, initially disclosed by the Digital Today media outlet, details that Kwon managed instigating the liquidation of two of the TerraLabs subsidiaries.
These two subsidiaries were those belonging to the Busan and Seoul headquarters, which were agreed to be dissolved within the framework of a general meeting of shareholders on April 30 of this year, while their disappearance would have taken place between 4 and May 6.
The context and the time proximity of these decisions raised suspicions in the crypto community, given its potential correlation with the events of LUNA Financial Quasi-Breakup and the UST Stablecoin Disparity in the early hours of May 10.
TerraLabs would have dissolved two of its most important subsidiaries, potentially triggering the fall of LUNA and UST
Terra: after the collapse, the lawsuits come
Do Kwon would be on his way to face legal problems in South Korea, his country of origin, after it became known that a well-known law firm prepare to sue the employer.
LKB & Partnersthe group in question, will initiate legal action against Kwon in representation of multiple affected investors.
The rumors even link several members of the group of lawyers as part of the complainantswhich would have invested in Terra UST.
According to the report, the firm also plans to apply to the Seoul Southern District Public Prosecutor’s Office for effect a provisional seizure order on Kwon’s property.
Do Kwon, CEO of TerraLabs, will be sued by a group of lawyers representing investors affected by the collapse
A complaint that does not stop growing
Additionally, the complaint was also filed with the Seoul Metropolitan Police Agency Financial Investigation Unit.
In fact, the representative of the project he would not be the only one facing legal action against him.
According to Yonhap media, quoted by The Block, the LKB agency is also considering suing Daniel Shin (Shin Hyun Sung), the other co-founder of Terra, who recently left the company.
In addition, according to the local media, several other Investor groups also plan to go down this route with class action lawsuits..
Do Kwon, on the ropes: now a rumor about a possible pyramid scheme has emerged
The final end of Terra?
The bad news for Terra would not be the fact of the innumerable complaints that she may receive against her, but that, apparently, the legal team of the company would have disintegrated after the fall.
Terraform Labs’ internal legal unit, headed by Marc Goldichattorney general, Lawrence Florianand lead litigation and regulatory counsel, Noah Axler, they resigned days ago before the debacle of the project.
With them, other collaborators also decided to jump ship and resign in the last days.
The fall of LUNA and UST generated millionaire losses to investors from all over the world
South Korean authorities want to investigate Terra
Still, the problems for Kwon do not end there: South Korean regulators decided to carry out a “emergency inspection” between the exchanges and called a special parliamentary hearing to discuss the case.
Besides, the businessman was summoned to testify before the legislators to provide explanations for the Terraform Labs cryptocurrency debacle.
The call to the hearing is in tune with the concerns expressed by other local authorities in the face of the large number of people affected in the country: it is estimated that between 200,000 and 280,000 South Korean investors were affected by the fall.