7 South Korean crypto exchanges hit in Terra Luna fraud raid

According to the Yonhap News Agency seven cryptocurrency exchanges in the nation have been searched by Korean prosecutors looking into a fraud case related to the demise of the LUNA protocol and its sister asset TerraUSD (UST) stablecoin.

On Wednesday, officers from the Seoul Southern District Prosecutors Office raided Coinone, Upbit, Bithumb, and four local exchanges in addition to the residences and workplaces of connected individuals.

To determine whether Terraform Labs (TFL) CEO Do Kwon purposefully destroyed the coin, investigators acquired transaction records and "other materials."

Investor complaints were made against Kwon and TFL co-founder Daniel Shin back in May by UST and Luna investors. Last month, detectives acquired Kwon's tax papers.

They demand explanations for the billions of won that were lost when both coins failed.

Before making a decision, Korean authorities said they will review the materials they have acquired and interview witnesses.

The legal disputes and issues surrounding the protocol's stunning collapse keep piling up. A class-action complaint was filed against Binance US and its CEO Brian Schroder in June on the grounds that the exchange misrepresented UST as "secure," according to a group of investors.

Around the same time, claims surfaced that Kwon had cashed out over $3 billion in cryptocurrency prior to the coins' collapse via Abracadabra's Degenbox system.

And in June, a new complaint was filed against Kwon and several other cryptocurrency firms, including Terraform Labs, Three Arrows Capital, and Jump Crypto, alleging that they had broken federal securities laws and misled investors about the stability of the coins.

It is specifically claimed that the defendants misled investors into purchasing LUNA and UST at inflated prices, neglected to register LUNA and UST as securities with the SEC, and falsely said that reserves were sufficient to "defend the peg" and continue interest payments.