Singapore authorities have officially launched an investigation into Terraform Labs and its fugitive founder Do Kwon, nearly a year after the stablecoin issuer collapsed, sending the entire cryptocurrency markets into a two-trillion-dollar tailspin.
The city state’s police force said that “investigations have commenced in relation to Terraform Labs”, adding that inquiries are “ongoing”, Bloomberg first reported.
It comes a month after the Securities and Exchange Commission (SEC) in the US accused Terraform Labs and Kwon of fraud.
SEC chair Gary Gensler alleged that Kwon and Terraform Labs failed to provide potential investors with “full, fair, and truthful disclosure as required for a host of crypto asset securities”.
Kwon is also wanted by authorities in his native South Korea to answer for possible capital markets law violations.
Singapore-registered Terraform Labs developed and issued the TerraUSD (UST) algorithmic stablecoin, once the largest of its kind.
UST was supposedly pegged to the US dollar and was used to facilitate crypto trades without the inherent volatility of bitcoin, ether and other altcoins.
In March 2022, UST depegged from the dollar, sending its market value from US$30bn to US$500mln in a matter of days, effectively wiping 99% off its valuation and causing billions in losses for holders.
Its sister coin, Terra LUNA, suffered a similar fate. Their combinsed US$40bn collapse was the first domino in the chain of events that led to the crypto winter of 2022.
Kwon’s whereabouts remains unknown, though some prosecutors suspect he may be in Serbia.