Trio accused of causing Terra USD crash

South Korean authorities have apprehended three suspects who may have played a role in the collapse of the Terra ecosystem through Terra Labs.

The Terra USD crash unleashed what is one of the worst downturns that the industry has experienced in its history.

As per official sources, the three suspects are accused of $3.4bn worth of cryptocurrency fraud and have been charged with presenting false data to financial institutions, among other offenses.

The trio is also facing allegations of having transferred $304m from Woori Bank, a South Korean financial institution, to third parties abroad.

The transactions have been on the South Korean Financial Supervisory Services for a while now, with the regulator reporting that it spotted the transactions taking place between February 2021 and July 2022. These transactions were carried out from a total of 16 branches, according to authorities.

No further information has been made available at the present time, other than that the trio may have been directly involved in undermining the value of Terra USD which led to the stablecoin collapsing.

However, unlike other instances where such cryptocurrency collapses have happened, the loss of value of a stablecoin has undermined the entire concept of what a FIAT-pegged cryptocurrency is.

In theory, stablecoins are not supposed to crash. They trade at the exact same value as their FIAT counterpart does.

Terra USD was supposed to be pegged to the value of the US dollar, but it’s possible that depleting the cash reserves of the company forced its value to crash, unlocking the industry-wide debacle that followed.

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Source

Updated: 08/15/2022 — 22:00