The South Korean Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have launched an emergency inspection of domestic crypto exchanges. According to data from a report by Yonhap†
Emergency inspections for local crypto exchanges
The inspection is related to the recent collapse of Terra’s algorithmic stablecoin the UST and its LUNA token. The inspections aim to better protect investors.
“Last week, financial authorities asked for data on the number of transactions and the number of investors. In addition, they asked for the size of the relevant measures from the exchanges. I think they did it to draft measures to minimize the harm to investors going forward.” Said a representative of an unnamed South Korean crypto exchange to Yonhap.
TerraUSD and LUNA are developed by the company called Terraform Labs. This is a Singapore-based company that was co-founded in 2018 by Do Kwon and Daniel Shin. The company created an algorithmic system designed to keep the UST 1:1 pegged to the US dollar.
However, the system collapsed last week with the UST decoupling from the dollar and falling below USD 0.15. The price of LUNA, meanwhile, collapsed to near zero, effectively rendering the coin useless. According to Yonhap, an estimated 200,000 investors in South Korea have invested in TerraUSD and LUNA.