South Korea to tighten scrutiny of exchanges after Terra LUNA collapse

The illness of the Terra ecosystem has sent shockwaves crossed the crypto ecosystem, dragging down the full market. The debacle has not lone raised questions astir the validity and sustainability of algorithmic stablecoins but has besides accrued the urgency for regulating the market.

In airy of the disaster, South Korean regulators are looking to tighten scrutiny and supervision of crypto exchanges, according to a report by The Korea Times.

At an exigency two-day National Assembly seminar ending connected May 24, crypto speech leaders and high-ranking authorities officials discussed measures to antagonistic aboriginal fiascos similar the Terra-Luna collapse. Representatives from Upbit, Bithumb, Coinone, Korbit, and Gopax — the country’s largest exchanges — attended the seminar.

Sung Il-jong of the ruling People Power Party said astatine the seminar:

“We request to marque exchanges play their due role, and toward that end, it is important for watchdogs to supervise them thoroughly,”

“When exchanges interruption rules, they should beryllium held legally liable to guarantee that the marketplace functions good without immoderate troubles.”

The Financial Services Commission (FSC) is besides looking to:

“build adjacent ties with the Ministry of Justice, the prosecution and police, successful a bid to show immoderate amerciable acts successful the manufacture and support investors’ rights,”

Kim So-young, FSC Vice Chairman, said. By the FSC’s estimate, the Terra-Luna debacle has affected astir 280,000 South Koreans.

So-young besides said that the state needs to “strengthen planetary cooperation” to efficaciously modulate the integer assets market, fixed its decentralized nature, according to a report by Yonhap News Agency.

The study quoted So-young saying:

“In bid to gully up effectual regulatory systems connected crypto assets, we volition intimately reappraisal overseas cases of regulations and fortify practice with planetary organizations and large countries,” 

South Korean authorities are already looking into Terraform Labs, the institution down the Terra ecosystem, and its CEO, Do Kwon. The Seoul cyber-crime constabulary section has asked to frost the assets of Terraform employees suspected of embezzlement.

The FSC, Financial Intelligence Unit, and the Financial Supervisory Service are presently pouring implicit Terra’s whitepaper and different documents, according to a report by Newsis. This is being done to place the origin of the collapse, the standard of harm and to forestall aboriginal recurrence.

On the different hand, the prosecution is looking into Do Kwon’s relation successful the debacle and if helium engaged successful immoderate fraudulent acts with the Terra-Luna project. A South Korean instrumentality steadfast representing investors affected by the illness has brought a suit against Do Kwon and Terraform’s different co-founder Shin Hyun-sung.

Given the deficiency of regulations and the constricted authorization of supervisory bodies, it is unclear whether Terraform Labs volition beryllium held accountable for the losses. According to the Yonhap report, 13 crypto marketplace regularisation bills are pending successful the National Assembly.

The decease spiral of Terra began earlier this period erstwhile TerraUSD (UST) mislaid its peg to the US dollar. The sister currency LUNA, which helped support UST’s peg, besides plunged.

Around $45 cardinal was wiped disconnected the 2 tokens’ marketplace headdress wrong a week. From trading astatine astir $80 astatine the opening of May, Luna’s worth nosedived to adjacent zero by May 12.

While Do-Kwon has been trying to revive the Terra ecosystem, things look grim astatine the moment. The larger crypto marketplace continues to reel from losses amid Terra’s collapse.