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Policy & Regulation

South Korean authorities contact exchanges to freeze LFG assets

24 May 2022 : 04:53
2 min read
  • The South Korean police have contacted exchanges to freeze accounts related to LFG
  • The request is not compulsory by law and it is unclear whether the exchanges will comply
  • Authorities suspect that there was an influx of funds related to the embezzlement in the accounts

The South Korean police have contacted the Big Four exchanges in the nation to freeze the assets related to the Luna Foundation Guard (LFG), a non-profit firm supporting the cryptocurrency project Terra, while the investigation into the Terra team is underway. 

LFG assets under investigation?

The Seoul Metropolitan Police Agency’s 1st Cybercrime Investigation Unit revealed that they approached exchanges to freeze the assets of LFG, thereby preventing the firm from withdrawing corporate funds from accounts held on cryptocurrency exchanges. The authorities suspect that there was an influx of funds related to the embezzlement in the accounts related to the firm. 

However, as noted by Naver, the request from the police is not compulsory by law, and hence, it is currently unclear if the exchanges will comply with the request and freeze the accounts of LFG. 

The Terra crash has been one of the most notable events in the crypto industry; wherein many investors have lost their entire portfolios. It seems that the gravity of the crash or crypto bank run has attracted the attention of regulators who called for regulation of so-called stablecoins, i.e., cryptocurrencies pegged in a 1:1 ratio to fiat currencies. 

Grim Reapers deployed

As noted previously by Cryptonary, the authorities in South Korea are determined to investigate the Terraform Labs and its co-founder, Do Kown. To do so, the authorities have handed over the investigation to a special investigative and prosecutorial team called The Grim Reapers, which will complete the investigation on LFG. The Grim Reapers have been given the name for extraordinary work, with 346 arrests from 965 cases prosecuted between 2013 and 2020 and solving a $1.2 billion Lime Asset Management embezzlement scandal. 

Additionally, the National Tax Service (NTS) of South Korea is levying an additional 100 billion won($78 million) on Do Kwon and Terraform Labs for evading taxes.

“We have no outstanding tax liabilities in Korea,” said Do Kwon via a Twitter post


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