South Korean police call on exchanges to freeze LFG funds & more

By I-HODL | A Crypto Journey | 24 May 2022


The UST/LUNA fallout continues, my friends. Today, South Korean exchanges meet with members of the ruling party to defend their actions during the recent crypto crash as, according to reports, they are being charged with failing to implement enough investor protection measures to stop client losses during the collapse. Ouch.

And if that weren't enough, the police are calling on leading exchanges to freeze any funds linked to the Luna Foundation Guard (LFG) as they look into possibly charging TerraForm Labs CEO Do Kwon, now the most hated man in Korea, with running a Ponzi scheme.  I guess now might have been a good time to have a strong legal team on standby, right? Only LFG's legal team went and quit in the early aftermath of the crash. There's a lot of speculation as to why the legal team quit, but if you ask me, those poor guys were being paid in UST and took a right hook to the chin when that ship sank, right? But what do I know? Anyways, there's a lot for us to unpack today, friends, let's get into it.

South Korean exchanges to answer for their actions during UST/LUNA crash

Top South Korean exchanges face the music today as their representatives  are called to  an urgent meeting with the ruling party to account for their efforts to protect traders during the crypto crash. Among the exchanges identified are Korbit, Gopax, Upbit, Coinone, and Bithumb.

Ruling party member Yoon Chang-Hyeon is not letting up. After expressing concern last week that local exchanges might have benefited from the crash, charging high transaction fees and keeping trades open despite clear client risks in order to take advantage of high trading volumes, there are now media reports that the chairman of the parliament’s special virtual assets committee yesterday assured his followers on Facebook that the government would look into the exchanges' protection measures. And get this, guess who's also invited to the meeting? Yep, it appears as though our beleaguered friend, Do Kwon, has also been invited. Oh my. 

TerraForm Labs CEO Do Kwon under investigation for Ponzi scheme

Coincidentally, the beleaguered CEO who must really be regretting his careless social media forays by now- one can only assume- is already in scalding hot water as there are reports that he's being investigated by the Southern District Prosecutors of Seoul for possibly running a Ponzi scheme with the promises of high returns (20%) for staking UST on the Anchor protocol. Talk about a case of Murphy's Law, right? But I mean they wouldn't really be the first people to make the Ponzi allegations. There's been quite a bit of talk about that recently.

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And if that weren't bad enough, the police are calling on exchanges to freeze any and all funds linked to the Luna Foundation Guard. So how are they even gonna execute a LUNA hardfork or, as we now understand it, an entirely new blockchain?

South Korean police call for LUNA fund freeze

So, there's a million dollar criminal complaint brought against Do Kwon and TerraForm Labs co-founder Daniel Shin. The allegations are fraud and the violation of financial regulations.

Then there's a tax fine Do Kwon is reportedly being called upon to pay, a hefty $78 million for evading corporate and income tax payments.

There's the Ponzi scheme investigations, and now this- the request for a fund freeze because, get this, there are media reports that the police believe there could be clues linking the LFG funds with embezzlement.

I wonder, do you think the exchanges will comply? Should they, given that it's only a request and not a demand? Catch 22 question, right?

Meanwhile, the TerraForms team is forging ahead with proposals to salvage LUNA. In its latest public salvo, the team is suggesting an entirely new blockchain, not to be mistaken for a hardfork as it will not be sharing the history of the original.

New Zealand Police Investigate Fake Exchange

In other news, the New Zealand Police are investigating reports of a fake crypto exchange, Quwiex Limited, after the operators of the supposed crypto platform absconded with investor funds. According to reports, Quwiex originally claimed that it had been registered in New Zealand in September 2021, presenting false documents to support its claim. Then last month, in April, the exchange suspended withdrawals to upgrade its website, and do you know this made me think immediately of QuadrigaCX? Anyways, the day after the upgrade was completed, the website was deactivated, just like that, and investor funds went poof. Now the police are saying that because the operators of the platform appear to be overseas, the likelihood of recovering the stolen funds are low.

 

India's Central Bank Governor: Crypto has no value

The governor of India's central bank, the Reserve Bank of India,  Shaktikanta Das, appears to again be criticizing crypto, finding justification for the central bank's  anti-crypto stance in the recent UST/ LUNA crash and describing cryptocurrencies as having no underlying value.  

In an interview with India's CNBC TV18, Das reportedly said, “We have been cautioning against crypto and look at what has happened to the crypto market now. Had we been regulating it already, then people would have raised questions about what happened to regulation...  This is something whose underlying (value) is nothing. There are big questions on how do you regulate it. Our position remains very clear, it will seriously undermine the monetary, financial and macroeconomic stability of India."

Okay, so we know how he feels.   

IMF officials share views on crypto

There are reports, guys, that the International Monetary Fund (IMF) managing director Kristalina Georgieva does not think investors need abandon virtual assets altogether following the UST/LUNA crash. Well, that's interesting.

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Kristalina Georgieva, Image courtesy Flickr

Georgieva supposedly made these statements while speaking at the World Economic Forum's Annual Meeting at Davos. Now, I was not there, so I can't say for certain sure that that's actually what the IMF head says, but it's reported, all right? According to the media, Georgieva believes that not all virtual assets pose the same risks, and so all assets need not be be abandoned altogether, and she recognized that transactions are faster, at a lower cost and afford more inclusion.  

Meanwhile, deputy managing director Gita Gopinath described cryptocurrency as a volatile, risky, and speculative asset class, and points out that it is not a very easy-return  investment. Saying that she has stayed completely away from the sector, Gopinath qualified her statement by saying, "That’s just me and my level of risk aversion."

And so my friends, there you have it. Incidentally, how do you think the TerraForms debacle is gonna end? Do you think Do Kwon and team will be charged? Do you think the investors who brought the criminal lawsuit will find vindication in the law?

It's interesting to follow this case, I must say, because I think that there are implications from this for the wider cryptocurrency sector. So we'll see.

And quick question, should a proposal actually pass for a new LUNA blockchain, would you invest? I don't know y'all, if my hands have been burnt once, I kinda don't want to put it to the fire again. I mean I'll accept that I was burnt because I put my hand to the fire entirely all on my own, that's for sure, but I'd be keeping my hands really far from that flame the next time around. And let me tell you, I've lost money in crypto, guys, because of investment choices that I made, particularly when I first started investing and was like the kid in the candy shop. I don't hold anyone responsible for those decisions, but I learned, all right? And I continue to learn everyday. So I'm not gonna go all sour grapes on you. I love crypto for sure, and I support it wholeheartedly but how I feel about this entire LUNA/UST story is another matter altogether. But I'd love to know what you think, my friends. Will you be bagging some new LUNA should such a LUNA come out, just in case?

Okay, my friends, I'm off again in search of another story. Until we meet next time, please remember to be safe. We'll chat soon.

 

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I-HODL
I-HODL

Navigating the ebbs and flows of crypto trading, and writing about it.


A Crypto Journey
A Crypto Journey

There's nothing more exhilarating than navigating the ebbs and flows of crypto trading. I have sea legs today, but truth be told, I've been lost at sea more than I care to remember and I have weathered quite a few storms as a trader. But the crypto-verse has also rewarded my resilience, and so after every dip, I get right back to sailing in pursuit of me buried treasure. I love this digital evolution and am proud to be a part of it. These are the tales of a crypto adventure! 

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