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


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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.

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