Punishment Possible Only When Money Laundering Is Done Using Cryptocurrency
[Asia Economy Reporter Na Ye-eun] As the Korean cryptocurrency Luna plummeted by 99.99% compared to early this month, causing massive losses to investors, the possibility of punishment for Kwon Do-hyung, CEO of Terraform Labs and the developer, appears to be low.
According to global cryptocurrency market tracking site CoinMarketCap on the 16th, Luna is trading at 0.3 won per coin. Compared to the 78.73 dollars (approximately 101,089 won) recorded at the beginning of this month, this represents a 99.99% decrease.
Recently, as the value of TerraUSD (UST) declined, the price of its sister coin Luna began to crash. TerraUSD (UST) is a stablecoin designed to maintain a value of 1 dollar per coin. Most of the assets backing UST’s value are Luna, but as UST’s price fell below 1 dollar, Luna’s price also plummeted, creating a vicious cycle of decline for both UST and Luna.
Nearly 200,000 domestic investors have suffered losses. According to the financial sector, as of the 12th, the number of investors holding Luna on the four major domestic exchanges?Upbit, Bithumb, Coinone, and Korbit?was estimated to exceed 170,000.
With domestic and international losses surpassing 50 trillion won, calls for punishing CEO Kwon have been raised. In particular, as Kwon’s past remarks mocking critics and predicting the coin’s collapse have become known, investors are demanding a thorough investigation and punishment of the CEO.
However, there are no appropriate laws to punish CEO Kwon. Under current law, authorities can only punish money laundering through cryptocurrencies. Moreover, since Terraform Labs, the company issuing Luna, is headquartered in Singapore, investigations are difficult.
The Financial Services Commission and the Financial Supervisory Service, the main government agencies overseeing cryptocurrencies, have launched an emergency situation review regarding the Luna crash, but there is little they can do. Due to lack of legal authority, they cannot request documents from Terraform Labs or conduct inspections and supervision.
Meanwhile, as the situation worsened, CEO Kwon on the 14th expressed, "I am sorrowful that my invention has caused pain to everyone," and mentioned plans to revive the Terra ecosystem. The plan involves issuing 1 billion new coins, compensating Luna investors with 500 million coins (50%) and Terra investors with 400 million coins (40%).
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