Legal troubles mount for the co-founder of failed Terra crypto project Do Kwon as the South Korean government revives the dormant Grim Reapers of Yeoui-do to investigate Terra’s case.
The dedicated investigation and prosecution team is made up of members from various financial regulatory agencies and is tasked with prosecuting securities fraud and unfair trading schemes. Potentially at risk are co-founders Do Kwon and Shin Hyun-seong, as well as core members of the Terra team. Yeoui-do is the financial center of Seoul.
Today: Korea’s Yeouido Grim Reapers – the joint financial and securities crime investigative team – are back after 2.5 years.
And his first goal is $LUNA / @terra_money— Jun (@zunahn) May 18, 2022
Korea’s SBS News confirmed on Wednesday that the Terra case would be the first to be investigated by the revived Securities Crimes Joint Investigation Team. A representative for the team told SBS News, “The Terra case has caused serious harm to ordinary people, leading us to call this the first investigation.”
Reforming the dreaded investigative team could be a political move by new conservative President Yoon Seok-yeol, reversing the previous liberal Moon Jae-in government’s decision to disband it. However, the gravity of Terra’s situation is illustrated by the fact that this is the first case investigators will be handling in two years.
The team earned the nickname The Grim Reapers due to the high profile cases they handled. One of the biggest cases the team worked on was the $1.2 billion Lime Asset Management embezzlement scandal. The team was disbanded before the investigation was complete, leaving the case to be reopened.
Before its dissolution, the team amassed 346 arrests from 965 cases prosecuted from 2013 to 2020.
Terra is a Layer 1 blockchain. Terra (LUNA) and stablecoin TerraUSD (UST) were each among the top ten cryptocurrencies by market cap until a May 8 sell-off in UST triggered a death spiral that has resulted in billions in losses. As of May 8, Terra had a market cap of $24.8 billion, according to CoinGecko, but it now sits at $959 million
Many in the community blame Kwon for the failure of the project. In South Korea, too, a group of Terra investors wants to sue Kwon in a civil court for damages and in a criminal court for fraud. They will also urge the court to confiscate Kwon’s assets.
$LUNA and $UST Korean investors have sued Do both civilly and criminally for fraud. They also requested an order for a temporary seizure (freeze) of his assets.
They are represented by the law firm LKB & Partner.
— Doo | StableNode @Permisionless (@DooWanNam) May 18, 2022
As Moonwha Ilbo (Culture Journal) reported on Wednesday, the legal team involved in the criminal case will prosecute based on provisions of the Capital Markets Act, which is used to regulate financial aspects of the crypto industry but could be replaced by crypto-specific laws.
The legal team at LKB & Partners, the law firm handling the case, has a personal interest in the project, as partner Kim Hyeon-kwon explained to Moonwha Ilbo: “Some of the lawyers from this law firm were investors in Terra.”
A representative for the law firm did not immediately respond to a request for comment.
Related: Analysts assess the consequences of the collapse of Terra (LUNA) | Cointelegraph Interview
Kwon’s legal troubles extend beyond South Korea, as a Singapore resident filed a lawsuit against Kwon last week on behalf of at least 1,000 other residents who have invested in the Terra ecosystem.