FBI and Southern District of New York Investigate TerraUSD Stablecoin Collapse, Question Terraform Labs Team Members
TerraUSD is a stablecoin that is designed to be pegged to the U.S. dollar, providing investors with a more stable option for trading cryptocurrencies. However, last year, the stablecoin’s value plummeted, causing significant losses for investors who had put their trust in the cryptocurrency.
According to reports from the Wall Street Journal on Monday, citing sources who are familiar with the matter, the U.S. Justice Department is now investigating the collapse of TerraUSD. The investigation is being led by the FBI and the Southern District of New York, and former team members of the company that created the stablecoin have been questioned.
The investigation comes just weeks after the U.S. Securities and Exchange Commission (SEC) charged Do Kwon, the founder of Terraform Labs, with defrauding investors in a multibillion-dollar scheme. The SEC’s charges allege that Kwon made false statements and manipulated the price of the TerraUSD stablecoin to deceive investors.
The addition of a criminal investigation by the Justice Department raises the stakes for Kwon and his company. Criminal charges could result in significant fines and even prison time for Kwon and other executives involved in the creation and management of the TerraUSD stablecoin.
The collapse of TerraUSD highlights the risks associated with investing in cryptocurrencies. While stablecoins like TerraUSD are designed to provide investors with a more stable option for trading cryptocurrencies, they are not immune to market fluctuations and other risks.
The investigation by the Justice Department also underscores the need for greater regulatory oversight of the cryptocurrency market. As cryptocurrencies continue to gain mainstream acceptance and attract significant investment, it is essential that regulators have the tools and resources they need to ensure the integrity of the market and protect investors from fraud and other abuses.
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