Seoul Police Launch Investigation Against Terraform Labs Employee

The Seoul Police Department has launched an investigation against one of Terraform Labs’ employees. According to the Financial Times, the agency is checking information about potential embezzlement of company funds.

South Korean media company Chosun Biz provides similar information, citing the FDA’s report. According to the publication, the police stressed that the investigation is not directly related to the company’s chairman, Do Kwon.

Chosun Biz said this is related to an incident that occurred in May 2021. Authorities managed to freeze the cryptocurrency that the suspect transferred to the platform of one of the local exchanges. The amount of stolen funds was not disclosed.

According to the FT, the Seoul Southern District Attorney’s Office was also interested in Terraform Labs. The agency received two collective complaints signed by a total of 81 investors.

The plaintiffs allege that “the founders of Terraform Labs and the company itself misled contributors about flawed algorithmic coins.”

“We are investigating the case because people have filed complaints against the founders accusing them of fraud and violating financial regulations,” a spokesperson for the prosecution said.

Terraform Labs co-founder Daniel Shin denied any allegations of fraud in an interview with FT. According to him, the company had no intention of deceiving investors – it “just wanted to introduce an innovative payment settlement system”.

Shin added that the project team was not aware of the flaws in the TerraUSD algorithm and did not try to manipulate prices.

Earlier, media reported that South Korean officials re-formed an interagency group that was disbanded more than two years ago to investigate the collapse of the Terra ecosystem.

Recall that in May, journalists also reported inspections of Terraform Labs employees by South Korean law enforcement as part of an investigation into the collapse of Terra.