Five South Korean Terra (LUNA) investors with an accumulated loss of around 1.4 billion Korean won (US$1.1 million) represented by local law firm LKB & Partners have filed a complaint against Terraform Labs CEO Do Kwon and co-founder Shin Hyun-seung for two charges including fraud, according to local media reports.
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The law firm claims the project did not notify investors regarding the defects of TerraUSD (UST) and LUNA, and deceived investors with the unlimited expansion of LUNA issuance.
It also alleges Kwon and Terra are in violation of the Act on the Regulation of Conducting Fund-Raising Business Without Permission, as the project allegedly profited from the 19.4% interest rate on Anchor Protocol through UST, Yonhap News Agency reported.
Prosecutors are examining whether Terra-based decentralized finance platform Anchor Protocol could be defined as a Ponzi scheme.
LKB is still recruiting more UST and LUNA investors to join the legal action, and says it is also receiving inquiries from investors overseas.
The complaint was filed with the joint investigation team on financial and securities crime under Seoul Southern District Prosecutors' Office, which was resurrected under former prosecutor and now president Yoon Suk-yeol.
The joint investigation team was once nicknamed the "Grim Reaper of Yeoido," named after a Seoul district that symbolizes the country's finance sector.
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