South Korean police have reportedly launched an investigation into possible embezzlement involving a Terraform Labs employee. To prevent the transfer of funds, police have asked crypto exchanges to freeze the accounts of the Luna Foundation Guard.
Investigation of Embezzlement and Freezing of Assets
The Seoul Police Department’s Cybercrime Investigation Division announced Monday that it has opened an investigation into possible embezzlement by employees of Terraform Labs, local media reported.
A Seoul Police Agency official was quoted by Chosun as saying.
We have received information that there is a suspect suspected of embezzling company funds who is believed to be an employee of Terraform Labs.
The police are investigating after receiving a report of suspected embezzlement in the middle of this month. As part of the investigation, police will be reviewing details of cash and crypto transactions at Terraform Labs and Luna Foundation Guard (LFG).
Police explained that there is evidence that the embezzled funds flowed into Luna Foundation Guard’s account. As a result, the Cybercrime Division requested that the country’s major cryptocurrency exchanges, including Upbit and Bithumb, “urgently” freeze accounts held by Luna Foundation Guard in order to prevent the withdrawal of funds held at crypto exchanges.
However, the police freeze request is not a mandatory matter under Korean law, but rather a matter that each crypto exchange is required to do on a voluntary basis. Therefore, it has not been confirmed whether the freeze request was carried out, the publication reported.
Cryptocurrency Terra (LUNA) and Stable Coin Terraced (UST) collapsed earlier this month after UST lost its peg with the US dollar.
After the collapse, the South Korean government launched an urgent investigation into the two coins and met with representatives of the country’s top crypto exchanges to discuss measures to prevent similar incidents from occurring.
Last week, a number of victims filed a lawsuit against Terraform Labs CEO Kwon Do-hyung (aka Do Kwon) with the Seoul South District Prosecutor’s Office for alleged violations of the Act on Aggravated Punishment of Specific Economic Crimes (Fraud) and Regulation of Similar Receipts.
Additionally, Do Kwon dissolved Terraform Lab Korea a few days before the bankruptcy of LUNA and UST. While many suspected fraud, Kwon insisted that the timing was merely “coincidental.” He also claimed that his company is not obligated to pay taxes to the Korean government.
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