US DOJ opens probe into TerraUSD collapse

The FBI and authorities in the Southern District of New York questioned former members of the Terraform Labs (TFL) team as part of a U.S. Department of Justice investigation into the collapse of the TerraUSD stablecoin. The Wall Street Journal reports, citing sources.

According to them, the DOJ’s investigation covers the same areas as the SEC civil action filed against the company and its leadership in February.

In particular, investigators are examining the link between the South Korean payments company Chai and the TFL blockchain. The SEC alleges that TFL CEO Do Kwon misled the public about processing the Chai transaction through their network, even though the service used a “more traditional technology”.

U.S. prosecutors are also examining communications between trading firms, including Jump Trading Group, Alameda Research and Jane Street Group, about a TerraUSD bailout, Bloomberg News reports.

SCOOP: Jane Street, Jump and Alameda are facing scrutiny by US prosecutors for their Telegram group chats about a Terra bailout last May.

W/@avabmorrison @allyversprille @ElleBeyoud pic.twitter.com/MKZ5tjOXm8

— Yueqi Yang (@Yueqi_Yang) March 13, 2023

To date the SEC civil charges against TFL and Do Kwon for orchestrating multi-billion-dollar securities fraud. If brought by the U.S. Department of Justice, they would be criminal charges and could carry prison time.

Earlier in March, the Singapore Police also opened investigations into the company.

In December 2022, media reports citing the Korean prosecutors said that Kwon is hiding in Serbia. Later, representatives from the DOJ and the regulator clarified that these claims were not false.

The head of TFL himself said that is not on the run and is cooperating with law enforcement. In September Bloomberg reported that Interpol issued a red notice for his arrest.