South Korean police have reportedly requested exchanges to ‘freeze’ the assets of the Luna Foundation Guard (LFG), the non-profit organization set up to support the Terra (LUNA) cryptocurrency.
A news report published on Monday by Korean national broadcaster KBS says that the cybercrime police unit of the Seoul Metropolitan Police Agency had written to several exchanges highlighting the need to block withdrawals of corporate funds initiated by the LFG.
Per the report, investigators attached to the 1st Cybercrime Investigation Unit are convinced embezzled funds related to the LUNA collapse are being held in LFG accounts, thus the need for a freeze.
Exchanges not under obligation
But despite the Police’s request, the report states that exchanges are currently under no obligation to comply. Because there’s no legal requirement to do so, exchanges are at liberty to take action as deemed fit, KBS noted.
LUNA and TerraUSD (UST) collapsed dramatically this month, with the value of the stablecoin de-pegging from the dollar to zero. The LUNA coin also crashed 100%, setting in motion actions that include a lawsuit against Terraform Labs and potentially tougher sanctions from regulators, including from South Korean lawmakers.
Amid all these are question marks on how LFG handled the reserves under its control, with the organization saying it spend 80,000 BTC trying to save the UST peg.
An update from the Foundation on 16 May showed that its reserves balance included 313 BTC, 39,914 BNB, and 1,973,554 AVAX as well as 1.8 billion UST and over 222 million LUNA.
1/ As of Saturday, May 7, 2022, the Luna Foundation Guard held a reserve consisting of the following assets:· 80,394 $BTC· 39,914 $BNB· 26,281,671 $USDT· 23,555,590 $USDC· 1,973,554 $AVAX· 697,344 $UST· 1,691,261 $LUNA
— LFG | Luna Foundation Guard (@LFG_org) May 16, 2022