LKB & Partners, one of the top law firms in South Korea, has decided to sue Terraform Labs founder and CEO Do Kwon after the sudden collapse of TerraUSD (UST) last week, Korean media reported on Wednesday.
LKB will file the case against Kwon, a Korean national, on behalf of ordinary investors to the Seoul Metropolitan Police Agency, according to a report in the Munhwa Ilbo newspaper. Some of LKB’s employees may also join the case since they lost money in the UST collapse, the report says.
“There are related investors inside the law firm, and we will file a complaint against Kwon at the Financial Investigation Unit of the Seoul Metropolitan Police Agency,” Kim Hyeon-Kwon, a partner at LKB, told Munhwa Ilbo.
Besides filing a police complaint, LKB has also decided to file a provisional attachment order of Kwon’s properties to seize them in the Public Prosecutors’ Office of Seoul Southern District, according to the report.
A separate report from local news agency Yonhap said LKB is also considering suing Daniel Shin, another Terra co-founder.
The Block has attempted to contact Kwon and Shin via Terraform Labs and will update the story should we hear back.
The UST algorithmic stablecoin de-pegged sharply last week to levels below 10 cents, far from its target price of $1. It is still trading at that level. Terra’s native token Luna also crashed and is currently trading at a fraction of a cent, losing almost all of its value.
The implosions of UST and Luna have led to tens of billions of dollars in losses for investors, both retail and institutional. Korea’s financial regulators — the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) — have reportedly launched “emergency inspections” into local crypto exchanges to enhance investor protection.
Korean politician Yun Chang-Hyun has also reportedly called for a parliamentary hearing on UST to understand the cause of the collapse and measures to protect investors. Chang-Hyun wants Kwon and local crypto exchanges to attend the hearing.
In the wake of the UST chaos, Terraform’s in-house legal team has left the company, The Block reported on Tuesday. The Singapore-based firm has turned to outside counsel to assist with legal matters.
Meanwhile, Terraform hopes to amend the situation. Kwon has promoted a plan to fork Terra to create a new blockchain — but the community seems set against the idea.
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