The government of South Korea has prohibited current and former Terraform Labs (TFL) workers from leaving the country. TFL is the primary creator of the Terra blockchain. The action is being taken to ensure they are accessible for the ongoing inquiry into the collapse of the UST and LUNA tokens on the blockchain.
The Seoul Southern District Prosecutor’s Office, which is in charge of the investigation, reportedly gave the security crime squad the authority to enforce the ban, according to a report from JTBC. Although the actual number of them is unclear, the injunction is directed at important employees of the organization.
The prosecutor’s office said that in the course of the inquiry, there may be a search and seizure and employee summonses. Daniel Hong, a former TFL worker, has attested to the instruction.
Hong tweeted a picture of a government notification prohibiting him from going abroad. However, he questioned the action, saying it would probably deter the affected workers from helping with the inquiries.
The CEO of TFL, Do Kwon, presently residing in Singapore, is also mentioned in the paper as a government target. As South Korea does not have an extradition arrangement with Singapore, the government purportedly intends to summon Kwon there.
Since May, South Korea has been actively looking into what caused Terra’s algorithmic stablecoin, UST, to crash. Employees of TFL were previously served subpoenas ordering them to appear for interrogation and provide any pertinent corporate records.
According to sources at the time, TFL workers urged Kwon against releasing UST when the internal prototype of the stablecoin failed, and the prosecution reportedly obtained statements to that effect from a senior employee.
The Korean government is stepping up its attempts to regulate digital currency in addition to looking into Terra-related organizations and people. The parliament is working diligently to introduce its Digital Assets Basic Act (DABA) by 2023, as per the direction of the president-elect Yoon Suk-yeol.
Until the DABA law is complete, the South Korean government has established an interim committee with regulatory authority over the market and exchanges for digital currencies. All government agencies involved in regulating digital assets will coordinate their actions via this group.