Police in Singapore have launched an investigation against Terraform Labs even as its co-founder is still at large. Terraform Labs is responsible for the creation of TerraUSD stablecoin which is now defunct after its collapse. The crash of TerraUSD caused a ripple effect across the cryptocurrency sector leading to declaration of bankrupcy by other dependent organizations. After its downfall, other startups in the sector including FTX and Three Arrows Capital followed suit. Though some experts claim it is the collapse of FTX that caused the ripple effect, authorities in the US are still conducting their investigation into the saga with its founder Sam Bankman taking center stage. Mr Bankman was apprehended by the authorities but was released and placed under house arrest until the conclusion of the probe.
Reports by Bloomberg indicate that Singaporean authorities are yet to locate Do Kwon who they claim is currently not within its boarders. They are however, launching a probe into the Singapore based company, Terraform Labs. Investors have made complaints over their losses leaving the authorities in hot pursuit for the fugitive.
This investigation is multinational in nature since other authorities around the globe are still trying to locate the fugitive and arrest him. The US SEC(Securities and Exchange Commission), had a month earlier sued Do Kwon and Terraform Labs for charges of committing securities fraud since it also affected its citizens. The SEC however, managed to level charges against Terraform Labs for orchestrating a heist of crypto assets with the aid of algorithms. One of the charges filed on Terraform Labs by the SEC is the illegal transfer of around 10 000 Bitcoin from the project. The agency further claims that it has intelligence that those assets are being cashed out through a Swiss bank.
TerraUSD stablecoin was doing relatively well early last year until a trigger in the crypto market caused a lot of sell-offs by investors. Terraform then went ahead to purchase $2 Billion UST in an effort to remedy the situation but more sell-offs saw the inflation of UST’s sister token LUNA, a move that crashed both of their prices leading to their untimely collapse.
The Terra ecosystem had a wide reach globally, so its collapse affected many investors of different nationalities. Due to complaints from some of these investors, the South Korean authorities have also launched an investigation into Terraform. The South Korean prosecutors allege that Do Kwon was hiding in Serbia but the claims could not be substantiated owing to the fact that South Korea does not have an extradition treaty signed with Serbia. A delegation sent to Serbia to locate the fugitive returned empty handed. The authorities have however, asked Europol(European Nations Police) to hunt him down, apprehend and hand him over to authorities to answer for his crimes. The prosecutors have already filed charges of fraud and violating the Capital Market Act against Do Kwon but with his absence, no further action can be taken against him leaving Terraform Labs to answer for its involvement in the saga.
FTX and Do Kwon’s Terraform have been in the news a lot lately for all the bad reasons. While Do Kwon claims the probe against him as political prosecution by the governments, It leaves a lot to be desired about the apparent trust and transparency that blockchain claims to offer. Is this the result of bad actors among the crypto community or a flaw in the design of the technology? Leave your answer in the comment section below.
