By
Chimamanda U. Martha
April 19th, 2024
The Korean investigators are looking into the possibility of any intentional manipulation of the UST stablecoin price. After the Terra 2.0 launch, the team continues to face new challenges and hurdles.
Two weeks after the collapse of the entire Terra ecosystem, South Korean authorities launched an official probe into the TerraUSD (UST) crash. To investigate the matter, the prosecutors in South Korea have summoned all employees of Terraform Labs.
Terra UST Crash Probe
The prosecutors will investigate any possibility of intentional price manipulation and other things, reported local news publication JTBC last Saturday. The prosecutors are conducting an investigation of the Seoul Southern District Prosecutors Office’s joint financial and securities crime investigation team.
An unnamed employee, probably involved with the initial development of the Terra blockchain, has already testified. One of the employees also revealed that the team has doubts over the UST stablecoin designs from the beginning.
They also warned Terraform Labs founder Do Kwon about the algorithmic mechanism of the UST might eventually fail. However, Do Kwon insisted on proceeding ahead with the project. The employee further said:
“Even at that time, there was a warning inside that there could be a collapse at any time, but CEO Kwon Do-hyeong forced the coin to be launched”.
Earlier this month, the TerraUSD (UST) stablecoin started to lose its peg to the USD leading to a major collapse. The UST peg tanked all the way down to $0.10 USD eroding more than $40 billion of investors wealth in just a week’s time.
The Terra 2.0 Launch and New Problems
Last weekend, Terra finally launched a completely new Terra 2.0 blockchain network but without the UST stablecoin. The developers at Terra decided to compensate the victims of a crash by airdropping new LUNA tokens. However, soon after the airdrop, the price of new LUNA tokens tanked more than 70% in just 24 hours.
Post-launch, however, some users complained of not receiving the airdropped token. In an update to this, Terra noted:
“We are aware that some have received less $LUNA from the airdrop than expected & are actively working on a solution. More information will be provided when we have gathered all of the data, so stay tuned”.
Interestingly, there have been rumors circulating that the Terra founder is working on another decentralized stablecoin which he might introduce on the Terra 2.0 blockchain network. However, looking at all that has happened, will Do Kwon be able to regain the trust of the Terra community?
A verified insider close to TFL has confirmed that Do Kwon is currently working on design plans for a new decentralized stablecoin that will be built atop Terra 2. Fool me once…
— FatMan (@FatManTerra) May 30, 2022
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