South Korea Launches Probe After Terra’s Collapse; CEO Summoned

Details have emerged suggesting that the South Korean authorities have launched an investigation into the recent Terra Luna crash. Industry sources say that the Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have recently requested information on TerraUSD and Luna transactions. Local crypto exchange operators have been required to submit information, including trading volumes, closing prices, and the number of relevant investors.

Authorities Keen to Preserve Public Trust In Crypto

According to market analysts, the crypto market lost roughly $45 billion last week owing to the downturn. TerraUSD and Luna are believed to have attracted 200,000 South Korean investors, who have been adversely affected by the crash.

Consequently, the situation has prompted the top financial regulators in Seoul to action. Aside from the information mentioned above, local exchanges are to provide countermeasures to the market crisis and studies on what caused the fall.

Jeong Eun-bo, the head of the FSS, expressed concerns that the recent crypto market meltdown could erode trust in the crypto market. He determined that the FSS should specify the exact causes and implications despite constraints imposed by a lack of relevant regulations.

Additionally, Jeong also stressed the importance of stepping up necessary collaboration with foreign authorities to control the market effectively. This, he believes, is necessary given the international nature of cryptocurrency trading. His sentiments echo the statements of Ashley Alder, CEO of the Hong Kong Securities and Futures Commission. Alder expects a joint crypto regulatory body to launch in 2023.

Meanwhile, Do Kwon, CEO of Terraform Labs behind the Terra blockchain, has been summoned for a parliamentary hearing by the South Korean Conservative Party. A National Assembly Political Affairs Committee member Yoon Chang-Hyeon revealed that the hearing was necessary to determine the cause of the collapse measures to protect investors.

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Do Kwon’s Latest Proposal to Save Luna

Following UST’s decoupling and the death spiral of its sister token, Luna, Do Kwon has made several proposals to salvage the ecosystem. Earlier this week, he revealed a new plan to revamp and restore the ecosystem affected by its design flaws. 

Consequently, Terraform Labs will put forth a new governance proposal on May 18 to fork the Terra Luna blockchain. This will create a new network called Terra(LUNA), which will not be linked to the TerraUSD stablecoin. Meanwhile, the current Terra blockchain will continue to exist in its current form but will be called Terra Classic(LUNC).

If approved, the new blockchain will go live on May 27 with LUNA tokens airdropped to LUNC holders, UST holders, and essential LUNC developers. He further revealed that the new chain would be fully community-owned, with the Luna Foundation Guard(LFG) wallet address removed from the whitelist.

Furthermore, the proposed LUNC supply is capped at 1 billion units. 25% will go to the community pool, 5% to essential developers, and 70% to LUNC and UST holders in May, subject to vesting rules. 

However, despite the best efforts of the LFG and Do Kwon, the entire debacle has caused increased calls for regulation. The UK government has even taken a step forward to introduce stablecoin law into its regulatory framework. This has also extended beyond the national level.

Reports suggest the regulation of crypto-assets is likely to be considered at a Group of Seven finance chiefs meeting this week in Germany. This revelation was made by French central bank head Francois Villeroy de Galhau, who reiterated the need for global regulation following the past week’s event. He said,

“What happened in the recent past is a wake-up call for the urgent need for global regulation. Europe paved the way with MICA (regulatory framework for crypto-assets). We will probably … discuss these issues, among many others, at the G7 meeting in Germany this week”

Do you think Do Kwon’s new proposal for a Terra Blockchain would be passed by the Terra community? Let us know your thoughts in the comments below.