FBI, NY authorities probes collapse of TerraUSD stablecoin: Report
The United States Justice Department is reportedly investigating the collapse of the TerraClassicUSD (USTC) stablecoin which contributed to a $40 billion wipe out in the Terra ecosystem last May.
Two agencies within the department — the Federal Bureau of Investigation (FBI) and Southern District of New York (SDNY) have interrogated former staff at Terraform Labs in recent weeks, according to a Mar. 13 report by the Wall Street Journal (WSJ).
The probe covers similar ground to a lawsuit filed against Terraform Labs and its founder Do Kwon by the U.S. Securities Exchange Commission on Feb. 16, according to people familiar with the matter.
Among topics that investigators have asked about was the relationship between Chai, a South Korean-based payment platform and the Terra blockchain on which USTC operated.
The SEC alleged in its filing alleged that Kwon misled investors into believing that Chai transactions were processed on the Terra blockchain.
The SEC in its lawsuitalso accused Kwon of misleading investors about the risks of the algorithmic-based stablecoin, which is designed to be pegged 1:1 to the U.S. dollar.
It is unclear what specific charges the Justice Department is potentially pursuing. The investigation does not necessarily mean that charges will be filed.
Related: Do Kwon had the right idea, banks are risk to fiat-backed stablecoins — CZ
Since the collapse, Kwon reportedly left South Korea for Singapore, Dubai, and now Serbia, where he is now believed to be, according to South Korean officials. Two South Korean authorities were recently sent to Serbia to find Kwon but were unsuccessful in their search attempts.
Kwon however claims he is not “on the run” despite the South Korean prosecutors issuing Kwon an
Read more on cointelegraph.com
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