The Terra ecosystem collapsed in May, bringing the entire crypto market to its knees. Since then, several regulators have launched investigations against the company and its executive Do Kwon. The company has reportedly been sued for insider trading according to a recent report.
According to KBS, approximately 250,000 domestic investors had invested in Terra. And one of the main reasons investors flocked to its ecosystem was because it boasted of the industry’s “highest trading volume.”
Anchor Protocol used to be one of the largest DeFi services and continued to set records for the first few months of the year. However, according to KBS, the insiders have inflated the numbers themselves to gain investor confidence in the ecosystem’s stablecoin and native cryptos.
In particular, Anchor Protocol’s DeFi services were picked up to 19.5% APYs to TerraUSD deposits.
The allegations against Terra. talk out
Terraform Labs and its subsidiaries have been convicted of allegedly increasing the number of Anchor Protocol, their DeFi service, by shelling their capital. According to KBS, prosecutors are currently investigating the same.
The report claimed that large TerraUSD deposits, loans and collateral service customers on Anchor Protocol were none other than Terraform Labs and its foreign investors. According to the translated version of the report,
“… as a result of the KBS reporting, it appeared that a significant part of this service was maintained by Terra’s ‘self-investment’. After analyzing the customer list, it turned out that the customers who used Terra’s deposits, loans and collateral the most were none other than Terra and Terra’s investors.”
The report further claimed that the account with the most deposits in Anchor Protocol was the one Terra appeared to have managed with foreign investors.
“The ‘#1’ account for the use of collateral and loans was also Terra and Terra investment companies.”
KBS equated the whole situation with a bank “inflating its performance” with “car transactions” by “filling its vaults with money.”
In addition to prosecutors investigating these claims, a parallel class action lawsuit has been filed in the United States, alleging that CEO Kwon and other investors pushed up the price of the crypto.
Read more: New lawsuit filed against Terra and other involved
Korean prosecutors are also looking at another tangent. Revealing the same, KBS noted,
“Domestic prosecutors are also addressing allegations of inflating trade volume. In particular, it has been identified that an internal automatic trading program is under investigation.“