South Korean police move to seize Luna's assets in wake of UST collapse
The South Korean police are looking to seize the Luna Foundation Guard's assets before they can be withdrawn due to allegations of embezzlement.
On Monday, the Seoul Metropolitan police attempted to seize assets held by the Luna Foundation Guard, over allegations of embezzlement in the wake of the collapse of the TerraUSD (UST) and Terra (LUNA) crypto tokens earlier this month, according to a report from South Korean channel KBS News.
Stablecoin TerraUSD (UST) and its associated cryptocurrency Terra (LUNA) fell into a death spiral after the stablecoin lost its US dollar peg. A stablecoin is a crypto token whose value is linked to a specific non-crypto asset, in this case, the value of a US dollar.
The crash in the valuation of the two coins costed investors billions in a matter of hours. The organisation built to safeguard against exactly this death spiral, the Luna Foundation Guard, was unable to halt the spiral despite allegedly having billions of dollars worth of Bitcoin.
In all, it is calculated that Terraform Labs, the company which created UST and LUNA, had lost $30 billion due to the collapse.
However, to complicate the entire matter, the funds held by the Luna Foundation Guard have come under scrutiny, as an employee has allegedly come under investigation for embezzling funds, according to Tech In Asia.
According to a report from KBS News, the Seoul Metropolitan Police have asked local crypto trading platforms such as Upbit and Bithumb to limit withdrawals of the Luna Foundation Guard until the matter is cleared up.
Terraform Labs CEO Do Kwon is already under investigation for tax evasion, and may have to deal with private lawsuits from local LUNA investors who were impacted by the sudden valuation crash.
Edited by Anju Narayanan