KEY POINTS

  • Terra's collapse triggers financial regulators to start their own investigation
  • The crash affected more than 200,000 South Korean investors and wiped clean nearly $100 billion from the cryptocurrency market
  • LUNA was trading down 1.47% at $0.0001845

A South Korean parliament member wants to summon Terraform Labs CEO and co-founder Do Kwon and several executives of local exchanges while financial institutions, regulators and other government agencies have commenced probes into the collapse of cryptocurrency LUNA and stablecoin UST.

Yun Chang-Hyun, a South Korean parliament member and one of the key members of the country's ruling party, urged lawmakers to conduct a hearing on the collapse of Terra and to summon Kwon and others to be witnesses.

"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 situation and measures to protect investors," the parliament member reportedly said during a plenary meeting Tuesday according to local outlet Newspim.

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Chang-Hyun also questioned why local exchanges continued trading LUNA and UST during the collapse instead of closing it, suggesting they benefited from high trading volumes. "As there is a saying, ‘Even if the coin price falls, the exchange gets fees.’ Upbit, which was the last to stop trading even after seeing the crash, is the number one company with an 80% share. In just those three days, it earned close to 10 billion won [$7.8 million] in commission income," the parliament member noted.

The Terra brouhaha also triggered top financial regulators in South Korea to conduct their own investigations on the matter. Local media reported that the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) started asking local crypto exchange operators to share data related to LUNA and UST.

Data requested by authorities include closing prices, trading volumes and relevant investors, according to local media. Operators were also asked to provide countermeasures related to the cryptocurrency market crash, as well as their own analyses on the cause of the crash.

Over 200,000 South Korean investors were impacted by the Terra crash, which collectively, could be a massive amount. It was estimated that the collapse wiped almost $100 billion from the cryptocurrency market, which caught the interest of financial regulators worldwide.

Kwon has floated the idea of hard forking Terra and creating a new blockchain without stablecoin. He proposed the old cryptocurrency would be called LUNA Classic. LUNA was trading down 1.47% at $0.0001845 with a 24-volume of $1,127,637,425 as of 3:07 a.m. ET Wednesday, based on data from CoinMarketCap.

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