The Wall Street Journal has published a report which stated that the United States Department of Justice (DoJ) has opened a probe into the U.S. dollar-pegged stablecoin TerraUSD (UST) which collapsed in 2022. Terraform Labs, the issuer of the stablecoin and its executives are also being investigated. In the meantime, no criminal charges have been brought against the digital payment platform or any of its team members.
Unfortunately, the co-founder of the defunct crypto project Do Kwon has been indicted by the Securities and Exchange Commission (SEC). Last month, the U.S. regulator charged Do Kwon for engaging in a multi-billion dollar crypto assets securities fraud. The charge which was filed in the Manhattan federal court accused Do Kwon and Terraform Labs of misleading investors and failing to disclose risks involved in dealing with TerraUSD.
The ongoing investigation by the DoJ encircles the SEC’s charges. A complaint was filed in the U.S. District Court for the Southern District of New York which alleged that the defendants violated the anti-fraud registration and provisions of the Securities and Exchange Act. In the last few weeks, team members of Terraform Labs have been under intense examination from the Federal Bureau of Investigation (FBI) and many other watchdogs.
Regulators Buckle up in Terra USD Case
A week ago, Bloomberg reported that Singaporean Police are also investigating the co-founder of the now-shuttered crypto trading platform. As it stands, investigators are trying to ascertain the connection between the Korean payment platform Chai and the blockchain behind the TerraUSD.
Amidst the SEC indictment and investigation in February, the regulator explained that Chai used the platform to offset several transactions and in turn, created excitement in the power of the TerraUSD blockchain, according to Do Kwon and his team. The SEC referred to this explanation as a complete fabrication.
Some crypto platforms may have been implicated in the case and could likely get sued. Jump Trading Group, Jane Street Group and even Alameda Research, the sister trading firm of bankrupt cryptocurrency exchange FTX we’re said to have mulled plans of a potential bailout which never happened. Therefore, prosecutors in the US are looking through chat-group discussions involving these entities.
