The Grim Reapers Financial Crimes Unit has been revived to investigate the collapse of Terra

Legal trouble is piling up for failed crypto project Terra co-founder Do Kwon as the South Korean government revives Yeoui-do’s dormant Grim Reapers to investigate Terra’s downfall.

The Special Investigation and Prosecution Team is made up of members from various financial regulators and is designed to prosecute securities fraud and unfair trading schemes. Co-founders Do Kwon and Shin Hyun-seong, as well as key members of the Terra team, are potentially at risk. Yeoui-do is the financial center of Seoul.

Korean media outlet SBS News confirmed on Wednesday that the Terra case would be the first that the resurrected Joint Securities Crimes Investigation Team would investigate. A team representative told SBS News that “the Terra case has caused serious harm to average citizens, which has led us to designate this as the first investigation.”

Reforming the dreaded investigative team could be a political move by new conservative President Yoon Seok-yeol, reversing the previous liberal administration Moon Jae-in’s decision to disband it. However, the seriousness of Terra’s situation is illustrated by the fact that this is the first case investigators will be dealing with in two years.

The team earned the nickname The Grim Reapers due to the high profile cases they handled. One of the most significant cases handled by the team was the Lime Asset Management $1.2 billion embezzlement scandal. The team was disbanded before the investigation was completed, so the case should be reopened.

Before being disbanded, the team racked up 346 arrests in 965 cases prosecuted from 2013 to 2020.

Terra is a layer 1 blockchain. Terra (LUNA) and the stablecoin TerraUSD (UST) were each among the top ten cryptocurrencies by market capitalization until a selloff of UST on May 8 triggered a death spiral that resulted in billions in losses. On May 8, Terra had a market cap of $24.8 billion but is now $959 million, according to CoinGecko

Many community members hold Kwon responsible for the collapse of the project. In South Korea, a group of Terra investors are also set to sue Kwon in civil court for damages and in criminal court for fraud. They will also push for the court to seize Kwon’s assets.

As Moonwha Ilbo (Culture Journal) reported on Wednesday, the legal team involved in the criminal case will sue based on the provisions of the Capital Markets Law, which is used to regulate the financial aspects of the industry. cryptography but which can be replaced by cryptography. – specific laws.

The legal team at LKB & Partners, the firm handling the case, has a personal stake in the project, as its partner Kim Hyeon-kwon told Moonwha Ilbo: “Some lawyers at this law firm were investors in Terra”.

A representative for the law firm did not immediately respond to a request for comment.

Related: Analysts assess the consequences of the collapse of Terra (LUNA) | Crypto maintenance

Kwon’s legal troubles extend beyond South Korea, as a Singapore resident filed a lawsuit against Kwon last week on behalf of at least 1,000 other residents who have invested in the Terra ecosystem.