US Justice Department May Probe Collapse of TerraUSD (UST)
US Justice Department May Probe the Collapse of TerraUSD (UST). Terra was a formerly prominent stablecoin back in 2022. However, only in the time span of one week, did the value of the coin crash.
TerraUSD (UST) is a stablecoin pegged to the US dollar, which means the coin must maintain a 1:1 value with the dollar. later in the same year of 2022, three major stages occurred before TerraUSD (UST) collapsed into nothing. The first two traders were able to break UST’s peg. Second, its Labs and supporters repaired it. Then Third, continued sell-offs drained the funds which led to hyperinflation and thus caused its price to crash.
According to some reports from the Wall Street Journal, the Federal Bureau of Investigation (FBI) and the Southern District of New York (SDNY) have launched an inquiry into UST’s collapse. While probing into the matter they’ve already investigated the employees of Terraform labs – the company responsible for algo-stablecoin.
They’ve further Reported that they are seeking to interview more people connected to this case. If they find any trouble or loophole it might lead to a case against the founder of Terraform labs, Do Kwon.
The US Justice Department is on the same lines as SEC’s investigation
The that the US Justice Department is carrying is very similar in nature to the SEC’s. Even the US Security and Exchange Commission almost a month ago filed a lawsuit against the founder Doo Kwon and the Terraform labs. Allegedly they were charged with committing securities fraud and engaging in a scheme to defraud investors. They even claimed in the lawsuit the LUNA and UST stablecoins were securities.
Although it’s not sure yet what charges will be registered against Do Kwon and the Terraform labs, however, the Justice Department is almost on the same lines as SEC.
The Wall Street Journal reported that the FBI and SDNY are investigating the matter related to Chai payments. Meanwhile, the charges filed by the SEC indicate, Terraform Labs made a false statement regarding Chai – A south Korean mobile payment application. They claimed that Chai used Terraform’s blockchain to process commercial payments In addition they also duplicated the transactions. And made it seem like Chai actually used the blockchain for payments.
Other than that, the case involved the notorious participation of some other firms. Hence The US prosecutors also investigated those firms. According to a report by Bloomberg, they started by investigating any conversation linked to the case, on Telegram chat. The firms include the proprietary trading firm – Jump trading, a quantitative trading firm – Jane Street group, and the investing arm of FTX – Alameda Research.
Additionally, the authorities are looking into any issues conversations or anything associated with the case. Especially regarding the discussions pertaining to a possible bailout of the defunct stablecoin. As of now, there is no accused individual in this matter, so far.