FBI, NY authorities probes collapse of TerraUSD stablecoin: Report

The United States Justice Department is reportedly investigating the collapse of the TerraClassicUSD (USTC) stablecoin which contributed to a $40 cardinal hitch retired successful the Terra ecosystem past May.

Two agencies wrong the section — the Federal Bureau of Investigation (FBI) and Southern District of New York (SDNY) person interrogated erstwhile unit astatine Terraform Labs successful caller weeks, according to a Mar. 13 study by the Wall Street Journal (WSJ).

The probe covers akin crushed to a lawsuit filed against Terraform Labs and its laminitis Do Kwon by the U.S. Securities Exchange Commission connected Feb. 16, according to radical acquainted with the matter.

Among topics that investigators person asked astir was the narration betwixt Chai, a South Korean-based outgo level and the Terra blockchain connected which USTC operated.

The SEC alleged successful its filing alleged that Kwon misled investors into believing that Chai transactions were processed connected the Terra blockchain.

Do Kwon speaking astatine a league astir Terra earlier the LUNC and USTC collapsed. Source: Terra.

The SEC successful its lawsuitalso accused Kwon of misleading investors astir the risks of the algorithmic-based stablecoin, which is designed to beryllium pegged 1:1 to the U.S. dollar.

It is unclear what circumstantial charges the Justice Department is perchance pursuing. The probe does not needfully mean that charges volition beryllium filed. 

Related: Do Kwon had the close idea, banks are hazard to fiat-backed stablecoins — CZ

Since the collapse, Kwon reportedly near South Korea for Singapore, Dubai, and present Serbia, wherever helium is present believed to be, according to South Korean officials. Two South Korean authorities were precocious sent to Serbia to find Kwon but were unsuccessful successful their hunt attempts.

Kwon however claims helium is not “on the run” contempt the South Korean prosecutors issuing Kwon an apprehension warrant connected Sept. 14 and a reddish announcement filed by Interpol, a planetary instrumentality enforcement bureau connected Sept. 26.

However, Kwon claims that helium hasn’t seen a transcript of the South Korean apprehension warrant, according to an October interview connected the Unchained Podcast with Laura Shin, and helium continues to contradict fraud allegations connected societal media.

I americium not “on the run” oregon thing akin - for immoderate authorities bureau that has shown involvement to communicate, we are successful afloat practice and we don’t person thing to hide

Meanwhile, New York prosecutors are understood to beryllium investigating a bid of chat-group investigations from erstwhile members astatine Jump Trading, Jane Street and Alameda Research, which filed for bankruptcy alongside FTX, according to a Mar. 13 study by Bloomberg.

The probe is reportedly looking into whether marketplace manipulation tactics were progressive successful the TerraUSD stablecoin project.

Cointelegraph reached retired to Terraform Labs but did not person an contiguous response.