South Korean Politician Demands Parliament To Investigate TerraUSD’s Collapse

The “People Power Party” representative, a South Korean politician Yoon Chang-Hyeon called a parliamentary hearing on TerraUSD (UST) due to its sudden collapse last week.

According to a report from South Korean Newschannel “Newspim” on Tuesday, May 17, at a plenary meeting of the National Assembly’s Political Affairs Committee, Yoon Chang-Hyeon stated;

We should bring related exchange officials, including CEO Do Kwon of Terra, which has become a recent problem, to the National Assembly to hold a hearing on the cause of the situation and measures to protect investors.

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The Terra blockchain experienced a crisis starting on May 7 when the US dollar value of its algorithmic stablecoin, UST, started to decrease. This continued over the following days until UST hit a low of below 10 cents. The Luna token, which is native to the Terra blockchain, also lost a lot of its value and is currently trading at just fractions of a cent.

According to Yoon Chang-Hyeon, something raises questions about exchanging behavior during the market crash.

He said;

Coinone, Korbit and Gopax stopped trading on May 10, Bithumb on May 11, but Upbit did not stop trading until May 13,” he said. “Upbit, which was the last to stop trading even after seeing the crash, is the No. 1 company with an 80% share. In just those three days, it earned close to 10 billion won [$7.8 million] in commission income.

Furthermore, he said that as time goes on and legislation is delayed, the investors’ loss increases. As a result, authorities are watching the loss of digital assets with helplessness.

Emergency Inspections Of Terra Collapse 

According to Yonhap News Agency, on Tuesday, local financial regulators began “emergency inspections” of local crypto exchanges to improve investor protection following the collapse of the UST. 

As per the industry sources, the Financial Services Commission (FSC) and the Financial Supervisory Service asked cryptocurrency exchange operators to share overall transactions, including volume of trading, their closing prices, and the number of relevant investors linked to TerraUSD and Luna. In addition, regulatory authorities also asked them to provide countermeasures to the market crash and analyze what caused the collapse.

An anonymous official of a local crypto exchange told Yonhap;

Last week, financial authorities asked for data on the amount of transactions and investors and sized up the exchanges’ relevant measures. I think they did it to draw up measures to minimize the damage to investors in the future.

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Terraform Labs, the company behind the Terra Network, hope to regain public trust after they were hit with a major crisis. On Monday, founder Kwon proposed forking their network into a new chain because “Terra is more than UST.” They will put up the proposal for a governance vote today, May 18. 

Kwon said;

We encourage Terra developers to signal support & commit to build on the fork on public channels ASAP.

               Featured image from Flickr, and chart from Tradingview.com