According to The Wall Street Journal (WSJ), the U.S. Department of Justice has launched an investigation into the demise of Dokwon’s TerraUSD stablecoin.
The investigation is said to target former Terraform Labs team members interrogated in the US by FBI and New York officials.
The SEC’s civil suit includes Kwon, co-founder and CEO of Terraform Labs, as a named individual. Now part of the ongoing drama surrounding a South Korean crypto entrepreneur who is facing criminal charges for the first time in the US.
Prosecution against Dokwon in the United States
According to the WSJ, investigators investigating the TerraUSD bankruptcy have questioned the connection between South Korean payment app Chai and the underlying blockchain created by Terraform Labs to support the stablecoin.
The SEC claimed that Do Kwon misled the public by claiming that Chai’s transactions were processed on Terraform’s blockchain, when in fact Chai used more conventional technology.
Lawyers representing Do Kwon and Terraform said in court that they plan to seek dismissal of the SEC lawsuit.
Kwon previously denied any wrongdoing and said in a previous interview with the WSJ that he had expressed faith in TerraUSD and personally suffered losses as a result of its collapse.
It is currently unclear what specific charges the Justice Department is pursuing in connection with the TerraUSD demise.