[Asia Economy Reporter Kim Hyung-min] Investors who suffered losses from the crash of Luna and TerraUSD (UST), virtual currencies created in South Korea, have decided to file a lawsuit against Terraform Labs CEO Kwon Do-hyung and apply for provisional seizure of his assets.
According to the legal community on the 18th, the law firm LKB & Partners, representing Luna and TerraUSD (UST) investors, plans to file a complaint against CEO Kwon and request the provisional seizure of his assets. The complaint and asset seizure application are expected to be submitted to the Financial Investigation Unit of the Seoul Metropolitan Police Agency or the Seoul Southern District Prosecutors' Office. It is also being considered whether to sue Shin Hyun-sung, co-founder of Terraform Labs.
Signs of collective action are also emerging online. The membership of the internet cafe "Terra Luna Coin Victims' Group" exceeded 1,600 on the same day. This appears to be in response to a post made by the cafe operator on the 15th, titled "Recruiting victims to join the prosecution and complaint against Kwon Do-hyung and Shin Hyun-sung."
Terraform Labs used a unique algorithm that adjusted the supply of Luna, the base currency of the Terra blockchain ecosystem, to maintain the value of one UST at one dollar. Based on this, investors were attracted by a system promising up to 20% interest by allowing them to deposit UST and convert it into Luna. Some have pointed out that this was essentially a 'Ponzi scheme' (multi-level financial fraud).
The algorithm failed to function properly when the market froze. When UST fell below one dollar, Terraform Labs minted a large amount of Luna, which instead accelerated the price decline. Ultimately, the prices of Luna and UST plummeted within a week, wiping out approximately $45 billion (57.78 trillion KRW) in total value. It is reported that about 200,000 domestic victims suffered losses as a result.
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