Apparently, the United States Department of Justice is investigating the collapse of the TerraClassicUSD (USTC) stablecoin, that contributed to the disappearance of $40 billion from the Terra ecosystem last May.
Two agencies of the department, the Federal Bureau of Investigation (FBI) and the Southern District of New York (SDNY), have questioned former Terraform Labs staff in recent weeks, according to a March 13 memo from Wall Street Journal (WSJ).
According to people familiar with the matter, the investigation involves aspects similar to the lawsuit filed on February 16 against Terraform Labs and its founder, Do Kwon, by the US Securities and Exchange Commission.
Among the topics the researchers have inquired about is the relationship between Chai, a South Korea-based payment platform, and the Terra blockchain on which USTC operated.
The SEC alleged in its filing that Kwon misled investors into believing that Chai’s transactions were being processed on the Terra blockchain.
In its lawsuit, the SEC he also accused Kwon of misleading investors about the risks of the algorithm-based stablecoin, which is designed to be pegged 1 to 1 to the US dollar.
It’s unclear what specific charges the Justice Department might file. The investigation does not necessarily mean that charges will be filed.
Since the collapse, Kwon has 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 dispatched to Serbia to find Kwon, but their search attempts were unsuccessful.
However, Kwon claims he is not “on the run” even though South Korean prosecutors issued an arrest warrant for him on Sept. 14. and that the Interpol, a global law enforcement agency, issued a red alert against him on September 26.
However, Kwon claims that has not seen a copy of the South Korean arrest warrant, according to an October interview on the Unchained Podcast show with Laura Shin, and continues to deny the allegations of fraud on social media.
I am not “on the run” or anything similar – for any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide
—Do Kwon (@stablekwon) September 17, 2022
Meanwhile, New York prosecutors are understood to be looking into a series of investigations into chat groups by former members at Jump Trading, Jane Street, and Alameda Research, which filed for bankruptcy along with FTX, according to a March 13 report. from Bloomberg.
Apparently, the investigation is analyzing whether there were market manipulation tactics in the TerraUSD stablecoin project.
Cointelegraph reached out to Terraform Labs, but did not receive an immediate response.
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