SEOUL, South Korea (AP) — South Korean prosecutors have banned dozens of people connected to Terraform Labs from leaving the country as they expand an investigation into a $40 billion cryptocurrency meltdown. the company that has devastated traders around the world.

The Seoul Southern District Attorney’s Office said on Wednesday it planned to summon them for questioning as it tried to determine whether the company had committed fraud or violated financial regulations before its digital currencies implosed. , TerraUSD and Luna, in May.

The bureau did not specify the number of people placed under a month-long travel ban or who they are, though they may include current and former staff and developers. Prosecutors declined to provide further details, saying the investigation was ongoing.

Daniel Hong, a former Terraform developer, tweeted a government notice saying he was banned from leaving the country until July 19. imposed an exit ban on all former @terra_money employees today.

The collapse of TerraUSD and Luna, developed by Stanford-trained Terraform Lab co-founder Do Kwon, affected an estimated 280,000 South Korean investors while also causing wider unrest in the global cryptocurrency market.

political cartoons

TerraUSD was designed as a “stablecoin”, which is pegged to stable assets like the US dollar to avoid drastic price swings. However, around $40 billion in market value was wiped out for holders of TerraUSD and its floating sister currency, Luna, after the stablecoin plunged well below its $1 peg in May.

South Korean prosecutors launched the investigation last month following mass complaints filed by dozens of investigators. They could try to summon Kwon, who would be in Singapore and would be accused of having exaggerated the stability of its currencies.

Bank of Korea, South Korea’s central bank, said in a report earlier this month that the collapse of TerraUSD and Luna was a major factor in the contraction of the global currency market by more than 40%. compared to the end of last year, when its market value reached over $2.3 trillion. The U.S. Federal Reserve’s recent decision to raise its key interest rate to fight inflation also contributed to the fall by further pushing investors away from volatile assets, the bank said.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.