Terra Fallout Continues as Korean Police Target LFG Funds

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  • Korean police have sought to have funds from the Luna Foundational Guard seized
  • Exchanges have been asked to free funds belonging to the group
  • The move is separate to a police investigation filed against Terra and those involved

The fallout from the Terra collapse has continued with Korean police taking steps to freeze the assets of the Luna Foundational Guard (LFG). According to broadcaster KBS, police have taken measures to freeze what’s left of LFG’s funds, the foundation supporting the Terra USD and LUNA coins, which famously collapsed earlier this month. The move comes three days after The Seoul Southern District Prosecutors’ Office said Friday that it had launched an investigation into the activities of Terraform Labs and assigned the case to its Financial and Securities Crime Joint Investigation Team.

Investigators Want LFG Funds Frozen on Exchanges

The Seoul Metropolitan Police Agency’s 1st Cybercrime Investigation Unit said yesterday that it had recently requested exchanges to freeze LFG’s funds and prevent them from withdrawing corporate funds, explaining that they suspected that funds related to the embezzlement had flowed into Luna Foundation Guard. However, exchanges aren’t bound by law to accede to these requests, so its impact cannot yet be judged.

The LFG was recently forced to deny accusations of striking a deal that allowed “insiders” to exit their positions with UST at a dollar peg:

Do Kwon Implicated in $1.1 Million Fraud Suit

This request for a freeze on LFG’s funds is not related to a case of accusation of investment fraud which has already been launched by police, although few details are known about this yet. If things weren’t bad enough for Terra founder Do Kwon, he was also this week implicated in a complaint filed by five UST and LUNA victims who allege combined damages of 1.4 billion won (about $1.1 million) over charges of fraud and other violations of financial regulations.