KEY POINTS

  • A news site reported in November that around $1.4 billion in stablecoin was issued without any reserve backing
  • Local new agencies in South Korea claim authorities conducting another fraud investigation involving Do Kwon
  • LUNA was trading up 5.23% at $2.51

South Korean authorities are reportedly in possession of evidence allegedly suggesting that Terraform Labs CEO and co-founder Do Kwon, along with the so-called "big hand" investors, pre-issued around $1 billion worth of Terra's price-stable cryptocurrency SDT.

The infamous collapse of Terra's algorithmic stablecoin UST and its native token LUNA still cast a shadow over Terraform Labs CEO Kwon even after the team introduced a new Terra blockchain and a new native token dubbed LUNA 2.0.

South Korean authorities have secured a statement claiming that 1.5 trillion won, or around $1 billion worth, of SDT cryptocurrency was secretly pre-issued with only Kwon and several institutional investors called "big hands" knowledgeable of the said transaction, local reports said. Interestingly, Terra omitted this in the white paper at the time of the pre-issue, raising more suspicions among investigators.

What Are Terra Stablecoins
Terra released a set of explainer videos in September 2020 in partnership with CoinMarketCap Terra Official YouTube Account

Terra apparently pre-mined SDT, however after the devastating de-peg in May, TFL did not include it in the list of the company's assets. Pre-mining is crypto-speak for issuing crypto assets in advance, long before the company begins its blockchain operation, another local news site reported.

The issue of pre-issuance was confirmed by former CoinDesk correspondent Kim Dong-hwan, who claimed he had received a report about it. "I heard that there was such a thing, but when I heard it, it was a bit serious ... I had a phone interview with Kwon Do-hyeong, directly asking if there was any indirect 'pre-mining' (pre-issuance)," Daum reported.

CoinDesk Korea reported about Terra issuing $1.4 billion in stablecoin without any reserve backing, giving Terraform Labs (TFL) majority voting rights. "To put it simply, you got 1.5 trillion won worth of voting rights, Terraform Labs. 'Where to invest what, and how much money to give to the developer.' These are all decided by voting. You will be able to control those votes," Kim Dong-hwan said.Kwon has yet to respond to this latest allegation but FatManTerra, the Twitter user who has served as a mouthpiece for certain TFL whistleblowers, said the SDT pre-mine issue "could prove tough for them." However, he also noted that while "there were no formal public disclosures before CoinDesk Korea called Do out, [but] the big funds and chain analysts knew."

LUNA was trading up 5.23% at $2.51 with a 24-hour volume of $230,472,432 as of 11:10 p.m. ET on Tuesday, as per CoinMarketCap's data.

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