Stack of bitcoins over flag of South Korea

South Korean police want exchanges to freeze funds connected to Terra’s LFG

Authorities in South Korea are not letting up on their investigations into the Terra ecosystem crash. South Korean police have sent notices to digital currency exchanges requesting that they freeze all funds related to Luna Foundation Guard (LFG).

KBS news, a local news outlet, reports that the cybercrimes investigation unit of the Seoul Metropolitan Police Agency is behind the notices. The police claim that it has reason to suspect the Terra ecosystem-backing non-profit organization of carrying out embezzlement.

However, the exchanges are not bound by any South Korean laws to carry out the notice. KBS news says that the level of compliance is unclear as each exchange can arbitrarily decide if it will carry out the order and to what extent.

The police notice is also not related to other lawsuits that have been filed by disgruntled investors against Terra CEO Do Kwon, and Terraform Labs—the core developers behind the blockchain.

The digital currency exchanges are also facing their share of regulatory attention. Authorities have indicated that exchanges may have to answer for how they handled matters during the period of the UST de-pegging and subsequent market crash.

Terra pushing revival plans despite mounting legal pressure

Pressure has been increasing on the blockchain network from the government of South Korea. Last week, a long disbanded special financial crimes investigations unit was reinstated to look into the crash of Terra’s LUNA token and its algorithmic stablecoin UST.

Nicknamed the “Grim Reapers of Yeoui-do,” the unit was famed for its success in digging into high-profile cases. Meanwhile, regulators have also been stepping up their efforts to release their framework for the country’s digital currency market.

The crash has had far-reaching consequences outside of South Korea. Business Insider reports that global regulators are renewing their resolve to rein in the market. The report covers the effect the digital currency market crash has also had on Ukrainians.

Despite the external legal pressure and brewing in-house tussles, Do Kwon and the team behind Terra have been working on a revival plan. The plan largely involves airdropping the Terra blockchain to an entirely new blockchain and compensating UST and LUNA token holders with the new blockchain’s token.

In a recent update, the official Twitter account of Terra clarified that Terra 2.0, as the new chain will be called, will be an entirely new blockchain that does not share any history with the current collapsed chain.

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