The collapse of the Terra Luna ecosystem triggered a wave of crypto bankruptcies, both at companies in the sector and at large and small investors. After the fork of the project, it seemed that the waters would calm down, although the truth is that US justice does not forget what happened.
TerraClassicUSD (USTC) has been the subject of an investigation by the U.S. Department of Justice. USTC's fall contributed to the $40 billion wipeout in the Terra ecosystem last May. According to a March 13 report in The Wall Street Journal, two department agencies, the Federal Bureau of Investigation and the U.S. Attorney's Office for the Southern District of New York, have questioned former Terraform Labs employees in recent weeks.
The investigation covers similar ground to a complaint filed against Terraform Labs and its founder Do Kwon by the U.S. Securities and Exchange Commission on Feb. 16. Among the issues investigators asked about was 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 transactions were processed on the Terra blockchain. In addition, the SEC accused Kwon of misleading investors about the risks of the algorithm-based stable coin, which is designed to be pegged 1:1 to the U.S. dollar.
It is not known what specific charges the DOJ is potentially pursuing. The investigation does not necessarily mean charges will be filed. Since the collapse, Kwon has traveled from South Korea to 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 were unsuccessful in their search attempts. Kwon, however, claims he is not "on the run."
Separately, New York prosecutors are also looking into a series of investigations into chat groups of former Jump Trading, Jane Street and Alameda Research members. According to reports, the investigation is looking into whether market manipulation tactics were involved in the TerraUSD stable coin project.