The collapse of the TerraClassicUSD (USTC) stablecoin has attracted the attention of the Federal Bureau of Investigation (FBI) and the United States Attorney’s Office for the Southern District of New York.
The USTC was involved in a $40 billion wipeout in the Terra ecosystem in May 2020. Terraform Labs and its founder, Do Kwon, are alleged to have misled investors by claiming that Chai deals were reused on the Terra blockchain.
The US Securities Exchange Commission filed a lawsuit against Terraform Labs and Do Kwon, alleging misleading investors into investing in the USTC stablecoin. The FBI and the US Attorney’s Office are probing the relationship between Chai and the Terra blockchain. Further, New York prosecutors are looking into whether manipulation tactics were involved in the design of the TerraUSD stablecoin.
Do Kwon is reportedly hiding in Serbia, according to South Korean officials. However, Do Kwon denies allegations of fraud on social media but has not yet been arrested.
