South Korean politician, Yun Chang-Yun has called for a parliamentary hearing on Terra in a bid to find out the real cause of the sudden collapse of both the TerraUSD (UST) stablecoin and the LUNA token from CEO Do Kwon. The hearing which will include heads of Korean crypto exchanges also aims to formulate measures for investor protection, according to a Newspim report on May 17, 2022.
Terra Fiasco Takes a New Turn
As the Terraform Labs and the Luna Foundation Guard (LFG) teams continue to brainstorm on possible ways to resuscitate the dying TerraUSD and LUNA token, Korean authorities have put CEO Do Kwon and his team on the hot seat.
Per sources close to the matter, Yun Chang-Hyun, a representative under the umbrella of South Korea’s ruling People Power Party, has urged the country’s National Assembly to summon Terraform Labs CEO, Do Kwon and the heads of leading crypto exchanges in the country to a hearing, to explain the cause of the UST stablecoin and LUNA token collapse, and come up with measures to protect investors.
“We should bring related exchange officials, including CEO Do Kwon of Terra, which has become a recent problem, to the National Assembly to hold a hearing on the cause of the problem and measures to protect investors,” declared Chang-Hyun during the National Assembly’s Political Affairs Committee meeting.
Crypto Exchanges Under Inspection
Notably, the politician has also urged the authorities to point their searchlights into crypto exchanges to find out their role in the crash.
“Coinone, Korbit, and Gopax stopped trading on May 10, Bithumb on May 11, but Upbi did not stop trading until May 13,” he said. “Upbit, which was the last to stop trading even after seeing the crash, is the No. 1 company with an 80 percent share. In just those three days, it earned close to 10 billion won ($7.8 million) in commission income,” Chang-Hyun stated.
According to a local news platform, Yonhap, South Korea’s financial regulators are currently conducting emergency inspections on crypto trading venues and exchanges in the region, in a bid to beef up investor protection.
In the same vein, South Korea’s Financial Supervisory Service (FSS) and the Financial Services Commission (FSC), have mandated crypto exchanges to submit information on UST and LUNA transactions during the crash, including their trading volumes and the number of investors affected.
The agencies have also reportedly asked the exchanges to release details of the countermeasures put in place to cushion the UST crash and their analysis of the possible causes of the crisis.
“Last week, financial authorities asked for data on the number of transactions and investors and sized up the exchanges’ relevant measures. I think thy did it to draw up measures to minimize the damage to investors in the future,” an anonymous source told Yonhap.
The ongoing Terra crisis represents a watershed moment for the decentralized finance (DeFi) ecosystem and it serves as a clarion call to established projects to further examine the sustainability of their product offerings.
It will be recalled that in April 2022, TerraUSD (UST) hit the $17.5 billion mark to become the third-largest stablecoin in the world, only for the entire project to crash to nearly zero a few weeks after.
At the moment, no one can say for sure whether the UST stablecoin will ever regain parity with the dollar or if the LUNA token will resurrect from its current $0.00203 zone. If the Terra project eventually survives, Do Kwon and his team would have proven to the world once again that impossible means nothing in the cryptoverse.