Crypto Updates

US Justice Department Probes Collapse of TerraUSD

US’ DOJ Calls for Stronger Crypto Crime Laws, Launches DAC Network

The US Justice Department is investigating the collapsed algorithmic stablecoin TerraUSD, thus raising the possibility of criminal charges against Terraform Labs and its CEO, Do Kwon, who were already indicted for civil fraud in the country.

As the Wall Street Journal reported on Monday, the Federal Bureau of Investigation (FBI) and the prosecutors from the Southern District of New York (SDNY) are involved in the investigation. They have interviewed former employees of Terraform Labs and are seeking to question others.

None of the agencies officially confirmed the criminal investigation against the collapsed stablecoin issuer. While there are chances of criminal charges following such investigations, the prosecutors can also potentially scrap the probe.

Civil Lawsuit against Terraform Labs

Terraform Labs’ algorithmic stablecoin, pegged to 1-to-1 with USD, collapsed last year, sliding almost to zero. It also resulted in a wave of bankruptcies of crypto companies exposed to the project.

Earlier, the Securities and Exchange Commission (SEC) accused Terraform and Kwon of orchestrating and operating a fraudulent scheme from April 2018 until the project’s collapse in May 2022. The lawsuit alleged that the Singapore-based project raised billions of dollars from investors globally by selling a suite of interconnected crypto asset securities, many of which can be categorized as unregistered…

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