South Korean politician calls for hearing on Terra crisis

Yun Chang-Hyun, a representative from South Korea’s ruling People Power Party, has called for a parliamentary hearing on TerraUSD (UST) after the stablecoin’s sudden collapse last week, local news outlet Newspim reported on Tuesday.

“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,” Chang-Hyun reportedly said today at a plenary meeting of the National Assembly’s Political Affairs Committee. 

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The Terra crisis began on May 7 when UST, the Terra blockchain’s algorithmic stablecoin, started to lose parity against the US dollar. Over the following days, UST collapsed to below 10 cents and is still trading at that level. Terra’s native Luna token has also tanked and is currently trading at a fraction of a cent, losing almost all of its value.

Chang-Hyun also wants crypto exchanges to account for their behavior during the crash.

“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,” Chang-hyun added.

Upbit didn’t immediately return a request for comment from The Block. 

‘Emergency inspections’

Another major Korean outlet, Yonhap News Agency, reported on Tuesday that local financial regulators have launched “emergency inspections” into local crypto exchanges to enhance investor protection after the UST collapse, citing anonymous sources. 

Korea’s Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have reportedly asked crypto exchanges to share information on transactions linked to UST and Luna, including their trading volumes and the number of relevant investors. The two regulatory agencies have also reportedly asked exchanges to provide their countermeasures to the UST crash and their analysis of what caused it.

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“Last week, financial authorities asked for data on the amount of transactions and investors, and sized up the exchanges’ relevant measures,” an anonymous official of a local crypto exchange told Yonhap. “I think they did it to draw up measures to minimize the damage to investors in the future.”

Terra fork proposal

Despite the crisis, Terraform Labs, the company behind Terra, hopes to regain the public’s confidence after the collapse. Kwon proposed forking the Terra network into a new chain on Monday because “Terra is more than UST.” The proposal will be put up for governance vote on May 18.

“We encourage Terra developers to signal support & commit to build on the fork on public channels ASAP,” said Kwon.

Terra’s investors have begun showing support for Terra’s fork. Su Zhu of Three Arrows Capital tweeted last night: “Terra2 soon.”

Meanwhile, Binance CEO Changpeng Zhao has said that he doesn’t think the Terra fork will work because it won’t provide any value.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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