US Department of Justice opens investigation into Terra stablecoin

TerraUSD (UST) is an algorithmic stablecoin with a total crash in May 2022. It lost its peg to the dollar and also took away the value of Terra (LUNA). Both stablecoins and LUNA tokens fell to zero, resulting in billions in assets wiped out.

Now, more than nine months later, the Wall Street Journal (WSJ) reports based on anonymous sources that the U.S. Department of Justice has now set its sights on cryptocurrency projects.

File a lawsuit with the SEC

Terraform Labs and its former CEO Do Hyeong Kwon already faced charges brought by the US Securities and Exchange Commission (SEC) last month. If the DOJ ends up filing charges as well, then they are criminals and could end up in prison.

The SEC has filed a lawsuit against the company and co-founder Do Kwon and is seeking compensation from investors. In this lawsuit, the SEC is trying to prove that TerraUSD should be registered as a security. Terraform Labs would also falsely convince investors that the stablecoin is safe to remain pegged or pegged to the U.S. dollar. Additionally, regulators want to prohibit Do Kwon from selling and issuing cryptocurrencies, which the SEC considers securities.

Terra Stablecoin Research

The DOJ investigation covers similar areas as the SEC lawsuit. Former members of the team behind the stablecoin have reportedly been questioned by the FBI and the Southern District of New York in recent weeks.

The Journal also reported that the researchers asked about the relationship between South Korean payments company Chai and Terraform, the blockchain created to support TerraUSD. Kwon and his team claim that Chai has completed millions of transactions using the blockchain. However, the SEC claimed in February that this was completely fabricated.

Bloomberg also reported on Monday that U.S. prosecutors were also investigating group chat conversations between trading firms including Jump Trading Group, Alameda Research and Jane Street Group about a possible UST bailout that ultimately never happened.

Source of information: Compiled from CRYPTO-INSIDERS by 0x Information.Copyright belongs to the author Ivo Melchers, without permission, may not be reproduced

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