Luna·Terra Investors Submit Complaint to Seoul Southern District Prosecutors' Joint Investigation Team

"Algorithm Defect Not Properly Disclosed, Investors Deceived"

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Byung-don] Investors in the Korean cryptocurrency Luna and TerraUSD (UST) have filed a lawsuit against Do Kwon, CEO of the issuer Terraform Labs.

Law firm LKB & Partners announced on the 19th that they filed a complaint with the Seoul Southern District Prosecutors' Office against CEO Kwon, Terraform Labs co-founder Shin Hyun-sung, and Terraform Labs corporation on charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violation of the Act on the Regulation of Conducting Fund-Raising Business Without Permission.

LKB stated, "CEO Kwon and others designed and issued Luna and UST to attract investors but failed to properly disclose algorithm design errors and defects. Their act of unlimited expansion of Luna issuance, contrary to what was disclosed in the white paper, constitutes deception."

They added, "Opening the 'Anchor Protocol' to attract new investors by guaranteeing an unsustainable annual interest rate of 19.4% and attracting investments worth tens of trillions of won constitutes an act of unauthorized fund-raising."

This case is expected to be the first case handled by the Financial and Securities Crime Joint Investigation Unit (Joint Investigation Unit) of the Seoul Southern District Prosecutors' Office, which was revived after the appointment of Justice Minister Han Dong-hoon.

LKB added, "This case is complex with many legal issues and the scale of damage is astronomical. The victims expect the newly launched Joint Investigation Unit, after more than two years, to resolve their desperation and grievances."

Luna and UST recently experienced a sharp price drop, with a total value of approximately $45 billion (57.78 trillion won) evaporating within a week, and it is estimated that 200,000 domestic investors suffered losses.

Terraform Labs adjusted the supply of Luna, the base currency of the Terra blockchain ecosystem, to maintain the value of one UST at one dollar. However, as the cryptocurrency market froze, the algorithm malfunctioned, causing UST to fall below one dollar. Terraform Labs issued a large amount of Luna, which led to further price declines.

This content was produced with the assistance of AI translation services.