The collapse of TerraUSD, a stablecoin backed by the U.S. dollar, has caught the attention of the U.S. Justice Department, which is now investigating the matter. The probe comes after reports surfaced of the stablecoin’s abrupt downfall, leaving investors with substantial losses. The investigation aims to shed light on the circumstances leading to TerraUSD’s collapse, including potential misconduct or fraud. As the use of stablecoins like TerraUSD continues to grow, the outcome of this investigation could have implications for the wider crypto industry.
The creator of TerraUSD stablecoin, Do Kwon, is under investigation by the U.S Justice Department, with potential criminal charges coming after the coin’s collapse in 2022, according to the Wall Street Journal. The investigation follows charges filed by the U.S Securities and Exchange Commission against Kwon last month for allegedly deceiving investors in a multibillion-dollar scam. Terraform Labs, the firm behind TerraUSD, and Kwon face investigations and legal actions from authorities and prosecutors worldwide, including an arrest warrant from South Korea and ongoing investigations by Singaporean authorities. Local news in South Korea claimed that Kwon is now in Serbia via Dubai, with the Ministry of Justice there reportedly requested to assist in locating him.