Wednesday, October 5, 2022
HomeCrypto NewsMarketTerraForm Labs Under New Investigation About “Suspicious” Crypto Wallet Used For Embezzling...

TerraForm Labs Under New Investigation About “Suspicious” Crypto Wallet Used For Embezzling Its Bitcoin Reserves

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Investigation into Terra’s activities is still not over as fresh allegations emerge.

Since the collapse of Terra tokens UST and LUNA, the firm behind the crypto project TerraForm Labs (TFL), has been under widespread scrutiny from its community, with many alleging that the company is the major reason that caused the plunge of the cryptocurrencies.

While TFL is still trying to make investors whole following their losses last month, a fresh allegation has been leveled at the company by unknown investors.

Terra Faces Embezzlement Allegations

According to a Bloomberg report today, South Korean police have launched a new investigation into a recent allegation that employees of TFL embezzled the company’s Bitcoin (BTC) reserve.

Bloomberg noted that an official from the Seoul Metropolitan Police Agency said by phone that Korean law enforcement agents are investigating the wallet alleged to have been used to embezzle investors’ funds.

While the official did not disclose the owner of the cryptocurrency wallet, Korean media outlet Yonhap reported that the wallet belongs to Terra’s Luna Guard Foundation (LFG), the organization established to maintain UST’s peg against the dollar.

According to Bloomberg:

“The Seoul Metropolitan Police Agency is investigating a report about a “suspicious” crypto wallet that may have been used to embezzle Bitcoin, an official said by phone on Thursday. It wasn’t clear whether the wallet belonged to one or several employees, and the amount of Bitcoin possibly stolen isn’t yet known, the official said.”

It is noteworthy that during the course of sustaining UST dollar peg, LFG had amassed a total of $3.5 billion worth of Bitcoin.

However, at the time when UST lost its peg due to the massive interest rate of 20% paid out to investors of its Anchor program, Terra noted that it used its Bitcoin reserve to save UST from crashing further but failed, a move that was criticized by Binance Changpeng “CZ” Zhao.

Terra’s Lack of Transparency With the Community

Meanwhile, Terra has been largely criticized for its lack of transparency. Many investors believe the firm is not being entirely honest with them.

It is no longer new that Terra crashed due to the massive ROI paid to investors in its Anchor program. According to one of Terra’s core designers, Do Kwon, the CEO of Terra, despite being told that the Terra project will crash if the Anchor interest rate is set at more than 3.6%, still proceeded to launch the project at a whopping 20% ROI in a bid to lure more investors.

Similarly, fresh reports also emerged about how the TFL lied about not owning any of the new LUNA 2.0 tokens. However, investigations reveal that the company hid 42 million LUNA 2.0 tokens in multiple hidden wallets.

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Lele Jima
Lele Jima
Lele Jima is a cryptocurrency enthusiast and journalist who is focused on educating people about how the nascent asset class is transforming the world. Aside from cryptocurrency-related activities, Jima is a lover of sports and music.


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