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DeFi and Credit Risk

Police have filed notifications to cryptocurrency exchanges in South Korea, asking the sequestration of monies associated to the Luna Foundation Guard.

Korean authorities submitted a request to the country's biggest crypto exchanges on Monday, requesting that cash not be removed. The Seoul Metropolitan Police Agency specifically requested that the Luna Foundation Guard refrain from taking any action. According to the authorities, clues have been discovered that may link the organization to embezzlement.

Investor portfolios were smashed overnight earlier this month by the Luna/Terra algorithmic stablecoin disaster, which saw the coin's value plummet by almost 99 percent.

This request, however, is not a demand and is not legally enforceable. Each exchange can pick how they want to respond, but how they will react is unknown.

Do Kwon, CEO of Terraform Labs, has been probed and sued by several major Korean investors over the collapse of the TerraUSD (UST) stablecoin. The "Grim Reaper," a Korean Financial and Securities Crime Joint Investigation Team, was reactivated as a result of this.

Korean lawmakers have met with executives from each of these platforms, including Upbit, Bithumb, Coinone, Korbit, and Gopax. This meeting is presumably a tactic to exert pressure on the heads of these exchanges because they are not compelled to comply.

"We will review the exchange's investor safety procedures," Yoon Chang-Hyeon, chairman of the People's Strength Virtual Assets Special Committee, wrote on Facebook, according to Newspim.

According to the outlet, it is reasonable to believe that exchange representatives will be held liable in some way for the damage caused to investors by the Terra (LUNA) fall. According to Newspim, the Korean National Assembly is taking steps to control punishment in this area.

Two of the exchanges have already posted warnings on their websites, with Coinone suspending LUNA trading as of May 11 and Binance suspending certain spot trading as well.

Despite the fact that this official report is part of a larger tale, the request to crypto exchanges and the Do Kwon probe are unrelated. The National Assembly's and Korean government's initiatives demonstrate that Korea is willing to take the required steps to resolve the Terra ecological collapse crisis.

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