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Police Demand that Korea's Big Five Exchanges Cooperate.
Seoul Metropolitan Police Agency has issued a request to five crypto exchange companies to freeze Terra’s Luna Foundation Guard’s assets. They reportedly took action following their discovery of suspicious pointers to embezzlement in the foundation’s funds.
Terra USD (UST), an algorithmic stablecoin, depegged from its $1 peg, crashing to less than 10 cents earlier this month. Its sister coin LUNA also plummeted to almost zero, eliciting a backlash among its holders that has continued to escalate. From angry holders storming the CEO’s house, to police reports and calls for arrests, the list of consequential actions is endless.
This sanction is merely the latest on the list.
Korean Legislature Blames Exchanges for Sloppy Listing
As reported by KBS, Korea’s national broadcasting corporation, the police asked the exchanges to block any attempts by the foundation guard to withdraw funds. Exchanges in question were Upbit, Gopax, Bithumb, Korbit, and Coinone.
According to Chosun Daily, Korean police also accuse the exchanges of being sloppy with the listing of LUNA and UST. The police claim Korea’s top exchanges hyped the benefits of the coins while understating the risks. They also posit that Korean exchanges could have made money during the crash while keeping investors in the dark. This is despite the brief suspension of LUNA trades by most of the aforementioned exchanges, along with later warnings. Bithumb and Upbit, for example, reportedly made over $8 million off LUNA during the downward spiral.
Consequently, there will be a meeting to discuss these failings between the People Power Party (PPP) and these 5 major exchanges. Attending will be Policy Chair, Seong II-jong, digital asset chair Chang-Hyeon Yun, and Kim So-young the vice-chair in charge of the financial services commission. Each of the five exchanges will also present a delegate, as the Terra drama continues to unfold.
Exchanges Not Under Law to Comply
Despite the police seeming earnestness, it is unclear yet if the exchanges will give in to the police’s demand. In Korea, as it is in most jurisdictions, there are no explicit laws binding exchanges to answer to local enforcement. Given the decentralized nature of the crypto space, traditional regulations and structures have been a difficult terrain to navigate.
Earlier last week when a Singaporean reddit user reported filing a report against Do Kwon, other users likewise warned that the action was near futile.