The South Korean prosecutor’s office calls on all employees of the Terraform Labs cryptocurrency platform to give evidence, while Terra 2.0 loses about 70% in two days.
The case of Terra employees is handled by the Seoul Southern District Prosecutor’s Office, which specializes in investigating crimes related to securities and finance. South Korean authorities have reportedly summoned all Terraform Labs employees as part of a full-scale investigation into the collapse of UST and LUNC, local news agency JTBC reported on Saturday.
The main questions that law enforcement officers are looking for answers to are: could there have been deliberate market manipulation of the UST and Luna Classic (LUNC) exchange rate, as well as whether these crypto assets meet the requirements for placement on trading platforms.
Investigators believe that the mechanism of the Terra token was initially faulty, since the UST stablecoin is not tied to a stable collateral or profit model.
“At a certain point in time, there is no other way but to collapse because it cannot handle interest payments and fluctuations in value,” the authorities said.
This news came as Terraform Labs relaunched a new Terra network, Terra 2.0, on May 28, with the goal of reviving the collapsed Terra ecosystem. The old network was named Tetra Classic, and the old coins are now called LUNC. However, shortly after the launch, the rate of the new LUNA coin dropped sharply.
According to CoinGecko data, LUNA has dropped about 69% since opening from $18.87 on Saturday to $5.71 by Sunday noon.
Perhaps such a sharp drop is due to investors’ distrust of the upgrade to the Kwon. As many investors indicated on Twitter that they hoped to recover at least a small part of their capital lost due to the collapse of Terra.
For example, Luke Martin, who clearly does not believe in the success of Terra 2.0, wrote:
“The only reason to buy $LUNA 2.0 is to qualify for the next airdrop of $LUNA 3.0 after it goes to zero like $LUNA 1.0”
It is unlikely that after such sentiments from a person with more than three hundred thousand followers on Twitter, who in theory could invest in Terra, anyone will want to support the project. Let’s see what happens to Terra next.