In the aftermath of Terra’s historic debacle, regulatory scrutiny targetting the stablecoin industry through cooperative measures across borders has become urgent to authorities worldwide. According to a recent report, South Korean Justice Minister Han Dong-hoon has discussed with US officials potentially enhancing cooperation in fighting against security fraud and financial crimes.
Strengthening Ties on Crypto Regulations
Han Dong-hoon met chief officials from the US Securities and Commodities Task Force during a visit to New York on Tuesday, nodding for a cooperative investigation with the US agencies on the potential crimes involved in Terra’s collapse.
The partnership aims to strengthen information exchange across borders, doubling down investigative efforts on crypto and other financial crimes. In particular, Terra – the project being probed in both countries – is under the spotlight again:
“The two sides also agreed to share their latest investigation data on ongoing crypto cases, including the high-profile case surrounding the meltdown of stablecoin TerraUSD and its digital coin counterpart, Luna.”
The fall of Terra has caught legal scrutiny from global authorities. Last month, Korean prosecutors launched an investigation on the team, looking into possible fraud charges and market manipulation. Reportedly, a key member of the group was even banned from leaving the country.
Meanwhile, the SEC – the top US securities watchdog – expanded its scope of investigation on the Terra-based DeFi platform Mirror Protocol. The regulatory entity believed the protocol could have violated the Securities Act by offering investors to transact tokenized versions of popular stocks like Tesla and Airbnb.
In addition, the agency also looked into if the co-founder and CEO of Terra – Do Kwon – had violated the investor-protection regulations when he promoted UST and Luna before they collapsed.
Last week, the UK and US issued a joint statement on strengthening regulatory outcomes for digital assets across jurisdictions. Both authorities expressed concerns regarding the role of stablecoins and crypto-asset trading and lending platforms as the broader market downturn has revealed issues rooted in some problematic projects.
This came in the wake of crypto firms falling apart largely due to overly leveraging their existing assets during the bull market. As the bear market hits the industry, some have to file bankruptcy or claim insolvency as their debts pile up and their crypto positions get liquidated.