Terraform Labs accuses the South Korean prosecutor’s office of abuse of power

The company’s representatives called the case against Do Kwon “highly politicized”

29.09.2022 - 06:45

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2 min

What’s new? Terraform Labs (TFL), the company behind the release of the collapsed cryptocurrencies TerraUSD (UST) and LUNC, accused the South Korean prosecutor’s office of abuse of its power two weeks after law enforcement officers issued an arrest warrant for TFL CEO Do Kwon. The Wall Street Journal reports, citing its own sources in the company.

News on the WSJ website

What is known about the case? In late May, the South Korean prosecutor’s office opened an investigation into TFL employees on suspicion that they knew about the possible collapse of the Terra blockchain ecosystem. Main developers were later banned from leaving the country. The tax authority also reported that TFL was laundering money through a shell company.

In June, the US Securities and Exchange Commission (SEC) also launched an investigation into Kwon on suspicion of involvement in the trading of unregistered securities. In September, a South Korean court issued an arrest warrant for Kwon and five other TFL employees. In addition, Interpol put Kwon on the international wanted list.

Representatives of TFL outlined the arguments in defense of Kwon in a statement sent to the WSJ. In their view, from a legal point of view, LUNC is not a security. Consequently, it is not subject to South Korea’s capital markets laws.

TFL believes this case is “highly politicized” and the actions of the prosecutor’s office demonstrate injustice and an inability to uphold basic rights guaranteed by law. Representatives of the South Korean prosecutor’s office did not comment on these statements at the time of writing the news.

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