South Korea Police Wants Country's Crypto Exchanges to Freeze Luna Foundation Guard's Assets

Terra's UST stablecoin de-peg event wiped nearly $40 billion off the company's worth in value.

By Shomik Sen Bhattacharjee | Updated: 24 May 2022 16:23 IST

Highlights

LFG is a non-profit meant to maintain UST's stability
Korean exchanges are not bound by law to deploy an asset freeze on LFG
Terra's CEO Do Kwon has also been under the scanner lately

South Korean police are moving to freeze Luna Foundation Guard’s money

Photo Credit: Luna Foundation Guard

South Korean police authorities have taken measures to freeze assets of the Luna Foundation Guard (LFG) following the Terra UST stablecoin bust at the beginning of May. As per a report by a local news publication, the Seoul Metropolitan Police Agency has asked multiple exchanges to block Luna Foundation Guard from withdrawing any corporate funds. The report adds that authorities have put in the request on suspicion of misappropriation of corporate funds. That said, the exchanges are not bound by law to do so, meaning that whether or not those actions will be carried out is unclear.

Per a report published by the South Korean national broadcaster KBS, the Seoul Metropolitan Police Agency's Cybercrime Investigation unit has asked several local exchanges to withhold funds held in wallets used by the Terra-affiliated non-profit organisation.

The move comes hot on the heels of Terra suffering the greatest crash in crypto history when its UST stablecoin lost its peg to the dollar, sending its volatile token LUNA into a death spiral and erasing about $40 billion (roughly Rs. 3,10,380 crore) of value in a week.

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LFG, the non-profit established to ensure UST's stability, made efforts to save UST by selling its Bitcoin holdings as the meltdown took hold, but it wasn't enough to stop UST from crashing. LFG has since claimed that it spent more than 80,000 Bitcoin worth $2.4 billion (roughly Rs. 18,622 crore) to defend the UST peg, leaving only 313 Bitcoin remaining, in addition to its holdings in UST, AVAX, and a few other digital assets.

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Since Terra's UST de-pegging event and LUNA's collapse, Terra's founder Do Kwon has been a subject of scrutiny too. Last week, reports emerged that he had been ordered to pay $78 million (roughly Rs. 604 crore) for tax evasion in South Korea, an allegation he later denied, claiming that Terra has no outstanding tax liabilities in the country.

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