• The US Justice Department is investigating the collapse of the TerraUSD stablecoin and its creator Do Kwon for potentially criminal behavior.
• Last month, the SEC filed charges against Kwon for misleading investors in a multibillion-dollar scam.
• Interpol has issued a Red Notice for Kwon, alerting global law enforcement agencies to his whereabouts. Singapore authorities have also confirmed their investigation into the defunct project.
U.S. Justice Department Investigates Collapse of TerraUSD Stablecoin
The U.S. Justice Department is investigating the 2022 collapse of the TerraUSD stablecoin and considering bringing criminal charges against its creator, Do Kwon, as reported by the Wall Street Journal. Last month, the U.S Securities and Exchange Commission (SEC) had already filed charges against Kwon for allegedly misleading investors in a multibillion-dollar scam related to TerraUSD’s downfall.
TerraUSD Price Plummets and Loses Its $1 Peg
In May 2022, both primary stablecoins associated with crypto project Terra plummeted precipitously; TerraUSD (UST), almost totally collapsed and lost its $1 peg, plummeting to $0.26 while Luna – it’s sibling token – dropped below $0.22 after falling by more than 97%. At one point, Terra was among the 10 most valuable cryptocurrencies with a peak price around $120 USD per unit before its eventual demise .
U.S., South Korean & Singapore Authorities Investigate
The Federal Bureau of Investigation (FBI) and Southern District of New York have interviewed former workers of Terraform Labs -the firm behind TerraUSD- as part of their probe nearly a year later according to WSJ sources. South Korea has already issued an arrest warrant for Kwon and obtained an Interpol Red Notice – which alerts global law enforcement agencies– regarding his whereabouts; while Singapore authorities have confirmed they are also conducting an investigation into this matter as well .
SEC Allegations Against Do Kwon
The actions taken by U.S prosecutors are in line with allegations made by the SEC last month: that there were serious violations including false statements about liquidity levels in UST tokens , inadequate disclosures related to UST transactions , illegal sales practices , misappropriation or misuse of investor funds , etc .