Police in South Korea ask leading exchanges to freeze any funds linked to the embattled Luna Foundation Guard

Cryptocurrency exchanges in South Korea have received a notice from the police asking to sequester the Luna Foundation Guard funds.

S.Korean police probe Terra employee for alleged embezzlement

On May 23, 2022, the South Korean authorities sent a request to the top crypto exchanges in the country to prevent withdrawals. Specifically, the Seoul Metropolitan Police Agency asked to prohibit the Luna Foundation Guard from taking action. Police believe they have found clues that may link this organization with embezzlement charges.

The Terra algorithmic stablecoin crash, which dropped the coin’s value by more than 99%, crushed investor portfolios overnight earlier this month.

However, this requirement is not a requirement and is not enforceable by the law. Each exchange can choose how they want to respond, but it is not yet known how they will react.

Several prominent Korean investors requested that Do Kwon, CEO of Terraform Labs, be investigated and sued for the collapse of the UST stablecoin. This triggered the revival of the “Grim Reaper,” a Korean Financial and Securities Crime Joint Investigation Team.

South Korean lawmakers went further by meeting with executives from these exchanges, including Upbit, Bithumb, Coinone, Korbit, and Gopax. Since compliance is not required, this meeting is likely to be a move to put pressure on the heads of these exchanges.

According to Newspim, Yoon Chang-Hyeon, chairman of the People’s Strength Virtual Assets Special Committee, said on Facebook, “We will check the exchange’s investor protection measures.”

In a way, representatives from exchanges will be liable for the damages caused by the LUNA incident to investors. The press also reported that the National Assembly of Korea is taking the initiative to adjust the penalty.

Two of the exchanges have issued warnings on their websites, Coinone has suspended LUNA trading since May 11, and Binance has also suspended some spot trading. While this official report joins the broader evolving narrative, the claim to crypto exchanges and the Do Kwon investigation are not linked. The actions by the National Assembly and the Korean authorities make it clear that Korea is willing to take the necessary steps to get to the bottom of the Terra ecosystem collapse.

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