According to a report from Monday, the Justice Department is investigating Do Kwon, the co-founder of Terraform Labs, for his involvement with the LUNA collapse. Additionally, another report from March 13th revealed that US authorities are also looking into Telegram communications between Jane Streat, Jump Trading, and Alameda Research in which the companies discussed a possible bailout of the embattled stablecoin Terra USD.
Department of Justice is Investigating Do Kwon
According to a report from March 13th, the Department of Justice is currently investigating Do Kwon, the founder of Terraform Labs for his role in the LUNA collapse. The collapse, one of the key events of the “crypto winter” occurred in May 2022 when the dollar peg of the algorithmic stablecoin Terra USD failed causing LUNA to lose 50% of its value in a single day and crashing the entire ecosystem. The calamity led to the loss of an estimated $300 billion and a slew of bankruptcies.
In mid-February, almost full nine months after the crash, the Securities and Exchange Commission filed a lawsuit against Terraform Labs and Do Kwon. In its complaint, the Commission is alleging that the company and its founder orchestrated a multi-billion dollar fraud using “crypto-asset securities” and mislead investors about the stability of Terra USD.
South Korean authorities have been searching for Do Kwon since late last summer and there is currently an Interpol red notice issued for him. Terraform’s founder is currently believed to be hiding in Serbia, though local authorities have yet to make an official statement on the matter.
US Authorities Also Probing Jane Street, Jump Trading in Connection to Terra USD
Another report from Monday also indicated there is an ongoing investigation into prominent trading firms Jane Street and Jump. Allegedly, the probe is centered on a Telegram group chat involving representatives from the firms, as well as from FTX’s sister company, Alameda Research, in which a possible bailout of Terraform was discussed.
Reportedly, US authorities are concerned whether the discussion led to a conflict of interest, insider trading, and market manipulation. No one has, however, yet been accused of wrongdoing. Sam Bankman-Fried, the co-founder and former CEO of FTX Group, has already faced scrutiny over possible market manipulation with regard to the LUNA collapse late last year. He also worked as a trader for Jane Street prior to founding his cryptocurrency empire.
Alameda Research, along with most of the FTX Group, filed for chapter 11 bankruptcy in November 2022. The trading firm’s former CEO, Caroline Ellison, pleaded guilty in December, and allegedly confirmed that her firms comingled user assets and facilitated hidden loans to other FTX executives.
This article originally appeared on The Tokenist
Sponsored: Tips for Investing
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.