As was reported this week, Do Kwon – the creator of TerraUSD and LUNA, has been subjected to a warrant for his arrest in South Korea. TerraUSD sought to be an algorithmic stablecoin tied to the US dollar but lost its dollar peg generating an incredible loss for holders. The collapse of TerraUSD helped to spur a domino effect in the crypto-verse with multiple platforms pausing operations or filing for bankruptcy.
Earlier today, CI received a comment from Martin Cheek, managing director of SmartSearch, a UK-based provider of anti-money laundering software. Cheek said the pending arrest of Do Kwon will be welcome news to those investors who collectively lost billions of dollars purchasing both TerraUSD and LUNA.
“Both cryptocurrencies collapsed with significant subsequent industry fallout earlier this year, highlighting the importance of digital checks and enhanced due diligence to protect both investors and businesses,” said Cheek. “With the dramatic fluctuations in cryptocurrencies, it will also serve as a clear warning to anyone looking to invest in any potential reboot or loss chasing exercise to carefully look into who they are investing with. Very often it can be the people who consider themselves to be the savviest investors who get caught out.”
Cheek added that given the actions put in place by governments since the collapse of TerraUSD and LUNA, the failure has cleearly “strengthened the resolve” of regulators globally to take action against fraudsters and to bring crypto into the regulatory remit.
“ As a direct result of this case, the UK Government aimed to introduce new legislation to focus on stablecoins, tokens which are pegged to real-world assets such as gold and bring them in line with existing financial rules and regulations. The only thing that has slowed progress in the UK recently has been the recent skeleton government and leadership election. Now as the wheels of government begin to turn again, issuers, investors and businesses trading in crypto should expect regulatory efforts to continue as the new government needs to focus on this as one of its top priorities.
Cheek said that above all investors must remain vigilant as “paper checks are no longer enough.”
“…it is imperative that everyone carries out checks using electronic verification and all the digital tools at their disposal to protect themselves and their investments from potential fraud and financial crime.”