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Implosion of the stablecoin TerraUSD: South Korea imposes exit bans

Dozens of employees of South Korean company Terraform-Labs have been banned from leaving the country during the investigation into the collapse of the cryptocurrency TerraUSD. The Financial Times reports, citing prosecutors. Terraform Labs’ former and current employees have been placed on a “no-fly list”, presumably to prevent them from evading the prosecution. A former employee called it “outrageous and unacceptable” on Twitter that people are being treated as “potential criminals”. Anyone who wanted to collaborate would certainly not have wanted to do so after this “madness”.

Terraform-Labs was responsible for TerraUSD, the fourth largest so-called stablecoin in the world. These are cryptocurrencies that set their price at another value, such as the US dollar. A unit of the currency must therefore always be worth one US dollar. Terraform-Labs tried to ensure this with a so-called algorithmic binding and did not have sufficient reserves. In early May, TerraUSD fell from around $ 0.99 to around $ 0.01. Tens of billions of dollars of market capitalization were lost in the process. Investigations were launched in South Korea following the incident and dozens of investors filed complaints. According to the Financial Times, they accuse the head of Terraform Do Kwon of betraying them.

The collapse of stablecoins such as TerraUSD in early May accelerated the decline in the value of cryptocurrencies in general, with Bitcoin currently standing at around $ 20,000 after peaking at over $ 60,000 in the fall. The annual development of many digital currencies has therefore been devastating so far. The decline has accelerated away from stablecoins in recent weeks, as Bitcoin & Co has been caught on the downside of a generally bad mood on the financial markets. For Do Kwon, the events surrounding Terraform Labs may not have legal consequences only in South Korea. According to the Financial Times, the US Securities and Exchange Commission has also requested the release of documents.


(mho)

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