Legal troubles mount for Terraform Labs as Seoul police investigative
Terraform Labs, the parent company behind the collapsed Terra ecosystem, is currently under multiple investigations from the South Korean authorities.
The latest investigation revolves around the alleged embezzlement of Bitcoin (BTC) from the company’s treasury. According to a report published in a local daily, the Seoul Metropolitan Police Agency received an intelligence tip last month informing them of possible embezzlement of BTC by one of the employees of the firm.
The police stated that the investigation into the alleged embezzlement of BTC from the company’s treasury had no direct connection with tainted co-founder Do Kwon and they are investigating individual embezzlement charges at this point.
Authorities managed to freeze the stolen funds with the help of a crypto exchange until the investigation is complete. However, the amount of the stolen funds wasn’t disclosed.
Luna Foundation Guard (LFG), a fund set up by the company that held over $3 billion in Bitcoin reserves, became the focus of interest in the aftermath of the collapse. The BTC fund was used to help balance the algorithmic stablecoin Terra USD (UST). The firm claimed all its BTC reserves were used in a futile attempt to stabilize UST.
In a recent interview with the Financial Times, Terraform Labs co-founder Daniel Shin denied any allegations of malpractice or fraud. He said:
South Korean authorities have launched a full-scale investigation into the recent collapse of the Terra ecosystem and the role of Terraforms Labs employees and co-founder Do Kwon.
Related: Chinese state media signals tighter crypto regulations in Terra aftermath
The first investigation began in the second week of May after 81 investors collectively filed two complaints against the firm
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