key takeaways
- According to local media reports, two South Korean financial regulatory agencies have launched an “emergency” investigation into local crypto exchanges.
- The investigation was reportedly in response to the Terra collapse that happened last week.
- Separately, Yoon Chang-hyun, a South Korean ruling party and member of parliament, has urged a parliamentary hearing on the incident, calling on Do Kwon as a witness.
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According to local media reports, two South Korean financial agencies have launched emergency inspections at local crypto exchanges in response to the dramatic collapse of Terra. A South Korean parliamentarian has also reportedly called for a parliamentary hearing on the incident, with local exchange officials and Terraform Labs CEO Do Kwon to testify as witnesses.
South Korea launches Terra probe
South Korea is focusing on the crypto industry after the historic explosion of Terra.
South Korea’s Financial Services Commission and Financial Supervisory Service have reportedly launched “emergency” inspections at local crypto exchanges to increase investor protection following the collapse of Terra, local media outlets reported. yonhap First informed of Tuesday According to industry sources cited by the newspaper, the two regulatory agencies asked local crypto exchanges to share data on UST and Luna transactions, including trading volume, price movements and the number of investors affected.
“Last week, the financial authorities asked for data on the number of transactions and investors, and the relevant measures sizing the exchanges,” a local exchange official reportedly reported. yonhap, “I think they have done this to devise measures to mitigate future losses to investors,” he said, asking the agencies to provide exchanges with a detailed analysis and their countermeasures to the incident. He was also asked to prepare an outline.
The Terra blockchain hosts the UST “stablecoin” and native governance token LUNA, which was developed by Singapore-based TerraForm Labs, a company led and co-founded by Do Kwon. Its algorithmic stablecoin UST started de-pegging By its target parity with the dollar around May 8. Despite Terraform Labs and Luna Foundation Guard Attempt To backstop the cascade with bitcoin reserve fundUST and LUNA continued to fall in the coming days, losing around $40 billion in a span of one week.
As a result of the catastrophe, billions of dollars were wiped out from the global crypto market, while several reports circulated about the incident taking the lives of investors. according to this yonhapAbout 200,000 South Koreans are believed to have invested in UST and LUNA, explaining the sudden interest of local authorities in the incident.
Additionally, another local outlet, Newspaper, informed of On Tuesday, South Korean parliamentarian Yoon Chang-hyun called for a hearing on Terra, urging local crypto exchange officials and Kwon to appear as a witness. He reportedly told a plenary meeting, “We should bring in the relevant exchange officials, including Terra CEO Do Kwon, which has recently become a problem, to hear on the reasons for the situation and measures to protect investors. ” Political Affairs Committee of the National Assembly.
Chang-hyun also raised questions about the conduct of local exchanges during the collapse of Terra, implying that high trading volumes may have encouraged exchanges to keep trading open rather than close it. “As a saying goes, ‘even when the price of the coin falls, the exchange gets a fee.’ Upbit, which was the last to close trading even after witnessing the crash, is the number one company with an 80% share. In just those three days, it earned nearly 10 billion won [$7.8 million] in commission income,” he said.
Despite the seriousness of the situation, local police have said that no civil complaint had been filed against either Kwon or Terraform Labs as of Monday, meaning authorities still haven’t opened a criminal investigation into the matter.
At press time, UST is trading around $0.087, while Luna has effectively halved, leaving little room for a potential ecosystem revival., Kwon proposes to fork the Terra blockchain and launch a new token, but, perhaps unsurprisingly, the plan has been overwhelmingly rejected by the community.
Disclosure: At the time of writing, the author of this article owns ETH and several other cryptocurrencies.