7 South Korean Crypto Exchanges Raided In Connection with TerraUSD Crash: Report

Prosecutors want to examine seized materials, question witnesses and determine whether TerraUSD’s crash was intentional

article-image

Blockworks Exclusive Art by Axel Rangel

share

key takeaways

  • Transaction records and other documents were taken from Upbit, Bithumb, Coinone on Wednesday
  • Do Kwon’s tax records were reportedly obtained from authorities to check whether he evaded taxes

Cryptocurrency exchanges in South Korea are being searched for links to the infamous Terraform Labs, the organization behind the Terra ecosystem in the wake of its stablecoin crash.

Yonhap News reported seven local exchanges were raided on Wednesday as prosecutors carried out inquests into a fraud case connected to the collapse of Terraform’s digital tokens TerraUSD (UST) and Luna.

Investigators from Seoul Southern District Prosecutors Office seized transaction records and other documents from the offices of Upbit, Bithumb, Coinone and four other local exchanges around 5:30 pm local time, the report said. Eight other locations, including the homes and offices of people involved in the fraud case, are believed to be raided.

The prosecutors reportedly want to analyze the seized materials and cross-question witnesses to reach a conclusion on final damages and explore whether the digital tokens’ crash was an intentional move by Terraform founder Do Kwon. They obtained Do Kwon’s records from tax authorities last month to examine whether he evaded tax payments, according to the report.

Yonhap didn’t provide specific details about the fraud case. Upbit, Bithumb and Coinone didn’t return Blockworks’ request for comment. 

An investigation into Terraform began in May after its stablecoin UST dramatically depegged from the US dollar. Under a “full-scale investigation,” authorities subpoenaed all employees and requested them to submit relevant materials. In June, key Terraform developers were barred from leaving South Korea while prosecutors investigated the firm. 

Both Do Kwon and Terraform have been ordered to separately comply with a subpoena by the US Securities and Exchange Commission.

UST, was kept stabled due to arbitrage mechanisms around its sister cryptocurrency LUNA. By design, traders could swap $1 worth of Luna for one TerraUSD. Luna and UST were the ninth and 10th largest cryptocurrencies by market capitalization at the time of their crash, taking down about $40 billion in representative value with their fall.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

kamino cover.jpg

Research

Kamino has solidified its position as the leading money market on Solana and is emerging as a DeFi bluechip. Although DeFi competition is fierce, Kamino has kept iterating on its product to provide the best-in-class UX, paired with a robust risk management framework and battle-tested infrastructure. Given the rollout of Kamino Lend V2, the protocol may scale aggressively over the coming months, penetrating previously untapped markets in Solana DeFi.

article-image

Also in the tokenized fund space, Franklin Templeton launches on Base and Securitize hits $1 billion in tokenized RWA onchain

article-image

It turns out that bitcoin never actually hit an all-time high in March. Thanks a lot, inflation.

article-image

Spire, Citrea and Nillion also announced raises this week

article-image

The latest recipient of an SEC Wells notice is a Web3 gaming company

article-image

Thursday’s selloff was led by tech stocks, triggered by disappointing outlooks from giants Meta and Microsoft

article-image

Historically, positive returns have been a bit more of a toss-up during the year’s 11th month