Terraform CEO could be sued for Ponzi fraud | Yonhap News Agency

SEOUL, May 20 (Yonhap) — Prosecutors are considering whether to charge Terraform Labs CEO Do Kwon with Ponzi fraud charges, sources said on Friday, a day after he was sued by investors for the high-profile crash. two cryptocurrencies of the company.

Last week’s crash saw Terraform’s two major tokens, TerraUSD and sister cryptocurrency Luna, drop more than 99.99% from their respective highs, wiping out more than $38 billion worth of gold in investor money in one week, according to data from CoinMarketCap. .

The financial authorities said that about 280,000 investors recently owned approximately 70 billion Luna coins, although the exact amount of the damage remains unknown.

On Thursday, five South Korean investors filed criminal lawsuits against Kwon and co-founder Daniel Shin for fraud and other financial irregularities, saying their combined damages amounted to 1.4 billion won ($1.1 million).

According to the sources, the prosecutors handling the case are looking into whether they can bring charges against the “pegging protocol”, which guarantees 20% annual returns to TerraUSD depositors.

Anchor Protocol, an application that facilitates contact between TerraUSD savers seeking financial gain and borrowers, has played a major role in the recent rise of the stablecoin.

“Kwon’s remarks promising a comeback could provide a key clue,” a spokesman for the prosecutor’s office said.

On Friday, the Seoul Southern District Prosecutor’s Office referred the case to its Joint Financial and Securities Crime Investigation Team.

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