USTC Collapse: Insights into the Justice Department Investigation

Background of the Terra Classic USD Collapse

The TerraClassicUSD (USTC) stablecoin tragedy is a cautionary tale from last May when a staggering $40 billion vanished in a blink, causing havoc in the Terra ecosystem. The U.S. Justice Department has jumped into the mix, sparking curiosity and concern about what really went down.

The Investigation in Action

Hot on the trail are two key players from the Justice Department: the FBI and the U.S. Attorney’s Office for the Southern District of New York. Recent interrogations of former Terraform Labs employees have brought to light questions surrounding the company’s operations and the actions of its founder, Do Kwon. A report from the Wall Street Journal on March 13 revealed some intriguing insights into the ongoing investigation.

Barking Up the Right Tree?

Interestingly, the Justice Department’s probe seems to overlap with a lawsuit filed against Kwon by the U.S. Securities Exchange Commission (SEC) on February 16. That suit alleges Kwon misled investors about his payment platform Chai’s connection with the Terra blockchain—leading many to rethink whether there was more than just a simple financial mishap at play.

Do Kwon’s Winding Road

Since the collapse, Kwon has pulled a magician’s trick by relocating from South Korea to far-off locales like Singapore, Dubai, and currently, Serbia. Despite a ripe aroma of conspiracy around his escape, he insists that he is not “on the run.” In an entertaining twist, Kwon has even chimed in on a podcast to claim he is cooperating fully with authorities and has yet to see that pesky arrest warrant issued by South Korea.

Market Manipulation: A Potential Play?

The New York prosecutors are not just looking at Kwon’s alleged antics; there’s also chatter about market manipulation tactics being investigated, particularly in relation to former members of trading firms such as Jump Trading, Jane Street, and Alameda Research. Bloomberg reported on March 13 that the probe might uncover links to the dramatic downfall of TerraUSD and its associated turmoil. If true, this could make for gripping drama in the world of cryptocurrency.