South Korea bans dozens of people from entry amid crypto investigations

SEOUL, South Korea (AP) — South Korean prosecutors have banned dozens of people associated with Terraform Labs from leaving the country as they expand their investigation into the company’s $40 billion cryptocurrency crash that devastated traders around the world.

The Seoul Southern District Prosecutor’s Office said on Wednesday it plans to call them in for questioning as it tries to determine if the company committed fraud or violated financial regulations before its digital currencies, TerraUSD and Luna, collapsed in May.

The office did not specify the number of people subject to the month-long travel ban or who they are, although they may include current and former employees and developers. Prosecutors declined to provide details, saying the investigation was ongoing.

Daniel Hong, a former developer of Terraform, tweeted a government notice showing that he was banned from leaving the country until July 19th. today introduced a travel ban for all former @terra_money employees.”

The collapse of TerraUSD and Luna, developed by Stanford-trained Terraform Lab co-founder Do Kwon, affected some 280,000 South Korean investors and triggered wider turmoil in the global cryptocurrency market.

TerraUSD was designed as a “stablecoin” that is pegged to stable assets like the US dollar to prevent wild price fluctuations. However, around $40 billion of market value was erased for holders of TerraUSD and its floating sister currency Luna after the stablecoin fell well below its $1 peg in May.

South Korea’s prosecutors launched an investigation last month following collective complaints filed by dozens of investigators. They may try to summon Kwon, who is reportedly in Singapore and accused of exaggerating the stability of his currency.

The Bank of Korea, South Korea’s central bank, said in a report released earlier this month that the collapse of TerraUSD and Luna was the main driver behind the global currency market’s contraction of more than 40% from the end of last year, when its market value topped $2.3. trillion The recent decision by the US Federal Reserve to raise the key interest rate to fight inflation also contributed to the fall, further pushing investors away from volatile assets, the bank said.

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