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South Korean prosecutors raided local crypto exchanges on Wednesday, July 20, as part of the investigation on Terraform Labs. Yonhap reported, citing a message from the prosecution office. The raid saw a team of investigators from the Seoul Southern District Prosecutors seize transaction records and other data from seven exchanges.
Upbit, Bithumb, Gopax, Korbit, and Coinone are among the raided exchanges. Also, the bust saw the investigators visit eight other residential and office addresses. These include the homes and offices of people under investigation for their association with Terraform Labs.
The spokespersons for Upbit, Bithumb, and Gopax confirmed that prosecutors searched their offices yesterday evening. They also confirmed that the investigators seized transaction records.
This is the latest development in South Korea’s efforts to determine what led to the collapse of the Terra ecosystem. This fiasco saw Terraform Labs’ TerraUSD (UST) and Terra (LUNA) tokens lose over $40 billion from their valuations after plunging over 90%.
Prosecutors started looking into the case after some LUNA investors filed a complaint in May. The investors accused Terraform Labs and its CEO, Do Kwon, of fraud and engaging in illegal fundraising. Consequently, the prosecutors barred Terraform Labs’ former and current employees from leaving South Korea.
Korean Exchanges Team Up to Protect Investors
This news comes after leading South Korean exchanges agreed to create an emergency system to prevent other Terra-style collapses. The new system will require local exchanges to convene and respond to adverse market effects within 24 hours.
Created by Upbit, Bithumb, Coinone, Korbit, and Gopax, the new system will require exchanges to adhere to a new voluntary code of conduct. By following the rules of the new code of conduct, the exchanges will help protect investors.
Under the new code, Korean exchanges plan to launch a warning system that indicates unusually high risk in cryptos. Additionally, they will embrace new listing rules and integrate a regular evaluation system for all listed tokens.
Through this approach, the exchanges seek to increase customer confidence, which decreased following the Terra debacle.
Commenting on this new approach, Jun Hyuk Ahn, Ledger’s Korean Market Lead, told:
It’s too early to predict exactly what will happen, but it should bring more harmony to the market. More transparency on listing and delisting processes will help bring back the trust from crypto traders that were lost through the Luna incident.