Značka: ust

4,400 disgruntled investors are hunting for Terra's Do Kwon

Members of a 4,400-strong Discord group called the “UST Restitution Group” (URG) have been attempting to track down the whereabouts of Terra co-founder Do Kwon.Members of the group, seemingly out of frustration at the lack of results from law enforcement agencies, are scouring the internet for clues and sharing them with the group in an attempt to track down Kwon. Members have suggested that he could be residing in places such as Russia, Dubai, Azerbaijan, or even on a yacht.Their continuing efforts come despite authorities in South Korea taking significant steps to bring Kwon to justice, with a Seoul court issuing a warrant for his arrest on Sep. 14 and Interpol having reportedly issued a “Red Notice” to law enforcement worldwide on Sept. 26 in response to the warrant.URG was originally formed on May. 16 as a chatroom for Terra ecosystem investors and to help launch lawsuits on behalf of its members to recover funds lost from TerraClassicUSD (USTC), the so-called stablecoin that depegged from the U.S. dollar.One member of URG, Kan Hyung-suk, will soon be traveling to Dubai according to an Oct. 19 report from the Financial Times, a city where many from the group believe Kwon is hiding. Another member from the URG was reported as saying:“Dubai is friendly to crypto, very international (he would not stand out), and has limited extradition treaties in place. It would seem like the best fit for the 3-5 hour timezone shift apparent in the data.”Hyung-suk is a 26-year-old software engineer and a former employee of Terraform Labs, the company behind the development of the Terra blockchain, and has been a member of the URG since May 26. Kwon, who became a controversial figure in the wake of the Terra ecosystem implosion, has maintained claims he is not “on the run” and is fully cooperating with all government agencies in communication with him.Related: South Korean foreign ministry orders Do Kwon to return his passportKwon was interviewed on Oct. 19 by Laura Shin, a crypto-journalist and host of the Unchained podcast, who asked him a range of questions relating to current news stories. Speaking on his current whereabouts, Kwon suggested that he moved from Singapore following the Terra crash due to privacy and personal security concerns, saying as an example that his apartment was broken into, and stated:“It’s not in the interest of being on the run or something like that, that I don’t want to disclose where I live. It’s just that every time the location where I live becomes known, it becomes almost impossible for me to live there.”A spokesperson from Terraform Labs maintains the charges against Kwon are “highly politicized”, and that South Korean prosecutors have expanded the definition of financial securities in response to public pressure. Kwon echoed this sentiment during his interview with Shin.

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WSJ: Terraform Labs claims case against Do Kwon is ‘highly politicized’

Terraform Labs, the company behind the development of the Terra (LUNA) blockchain said South Korea’s case against its co-founder Do Kwon has become political, alleging prosecutors expanded the definition of a security in response to public pressure.“We believe that this case has become highly politicized, and that the actions of the Korean prosecutors demonstrate unfairness and a failure to uphold basic rights guaranteed under Korean law,” a Terraform Labs spokesman said to The Wall Street Journal on Sept. 28.South Korean prosecutors issued an arrest warrant for Kwon on Sept. 14 for violations of the countries capital markets laws, but Terraform Labs laid out a defense arguing Terra (now known as Terra Luna Classic (LUNC)) isn’t legally a security, meaning it isn’t covered by capital markets laws.The spokesman alleged prosecutors of expanding the definition of a security due to intense public pressure from the collapse of Terra and its connected algorithmic stablecoin TerraUSD (UST), now known as TerraClassicUSD (USTC).“We believe, as do most in industry, that Luna Classic is not, and has never been, a security, despite any changes in interpretation that Korean financial officials may have recently adopted.” The argument by Terraform Labs’ stems from the unclear regulatory status of cryptocurrencies and the companies who create and issue them. Currently, capital market and electronic securities’ systems in the country don’t include a legal definition of non-standardized securities issued through a blockchain.Related: South Korea’s financial watchdog wants to ‘quickly’ review crypto legislationThe country is moving to regulate the space with its financial regulator, the Financial Services Commission (FSC) preparing guidelines for security tokens by the end of 2022. A leaked government report in May further revealed South Korea’s plans to roll out a crypto framework by 2024.Kwon’s whereabouts remain unknown and Terraform Labs did not comment on his location citing physical security risks, but Kwon says he’s not making an effort to hide even after a notice was sent to global authorities by Interpol.

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Breaking: Interpol 'Red Notice' issued for Do Kwon — South Korea prosecutors

Interpol has reportedly issued a “Red Notice” to law enforcement worldwide for the arrest of Terraform Labs co-founder Do Kwon.South Korean prosecutors in Seoul on Monday told Bloomberg the international policing organization issued the notice in response to charges Kwon faces in South Korea related to the collapse of the Terra ecosystem.The news comes only a week after South Korean prosecutors reportedly asked Interpol to issue a “Red Notice” for Kwon on Sept. 19. A Red notice is a “request to law enforcement worldwide to locate and provisionally arrest a person pending extradition, surrender, or similar legal action” according to the Interpol website.It also comes less than two weeks after South Korean authorities issued an arrest warrant for Kwon and five other associates for alleged violations of the country’s capital markets laws.Kwon was previously believed to have been residing in Singapore, but local authorities said on Sept. 17 he wasn’t in the country, with Kwon saying hours later he wasn’t “on the run,” though he didn’t reveal his location.Related: South Korea issues arrest warrant for Terra founder Do KwonThe Terra ecosystem Kwon co-founded crashed after its algorithmic stablecoin TerraUSD (UST) (now TerraUSD Classic (USTC)) lost its United States dollar peg in May causing billions of dollars worth of liquidations across the cryptocurrency market.

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Draft US stablecoin bill would ban new algo stablecoins for 2 years

Draft legislation in the United States House of Representatives would place a two-year ban on new algorithmic stablecoins such as TerraClassicUSD (USTC) which de-pegged from the US dollar earlier this year causing widespread crypto market contagion.The bill would criminalize the creation or issuance of new “endogenously collateralized stablecoins,” according to a current draft of the legislation obtained by Bloomberg. However the legislation includes a grace period of two-years for existing algorithmic stablecoin providers to change their models and collateralize their offering differently.The definition would reportedly cover stablecoins which depend on the value of another virtual asset from the same creator to maintain its price and is marketed as having the ability to be converted, repurchased or otherwise redeemed for a fixed price.The bill raises concerns over whether stablecoins such as Synthetix USD (SUSD) would be captured by the definition, as it is currently collateralized with the native asset of the same protocol in the SNX token. Other algo-stablecoins with a similar structure include BitUSD which is backed by BitShares (BTS).Those well-educated on crypto understand that Terra doesn’t represent all stablecoins, Celsius wasn’t DeFi, 3AC had nothing to do with the technology, etc.But as in all things, it’s a lot harder to engage with those nuances than to simply say “crypto bad, regulate it to death.”— Jake Chervinsky (@jchervinsky) September 19, 2022The draft bill also mandates the U.S. Treasury to undertake a study on algorithmic stablecoins and consult with the Federal Reserve, the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.It’s possible the panel could vote on the bill as early as next week, Bloomberg reports people familiar with the legislation state Democratic Representative Maxine Waters and Republican Patrick McHenry have been working to reach an agreement on the legislation, although it’s unknown if McHenry approved the latest draft.Related: The crypto industry can trust Cynthia Lummis to get regulation rightWaters Chairs the House Financial Services Committee, of which McHenry is a Ranking Member, both heard testimony at a hearing Tuesday that U.S. dollar-backed stablecoins could enhance national security due to the perceived prestige and reliability of the dollar.TerraClassicUSD (USTC), formerly known as TerraUSD (UST) is an algorithmic stablecoin which lost its 1:1 peg with the U.S. dollar in early May hitting an all-time low of $0.006 in mid-June which resulted in tens of billions of dollars worth of losses.

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Terra co-founder Do Kwon says he’s not ‘on the run’

Do Kwon, the co-founder of the Terra ecosystem, took to Twitter on Saturday asserting he’s “not ‘on the run’ or anything similar” after the Singapore Police Force (SPF) said Kwon wasn’t in the city-state.On Sept. 14, South Korean authorities issued an arrest warrant for Kwon and five other associates for alleged violations of the country’s capital markets laws. All were known to be in Singapore at the time, with prosecutors also attempting to revoke their passports a day later on Sept. 15.“For any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide,” Kwon tweeted.I am not “on the run” or anything similar – for any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide— Do Kwon (@stablekwon) September 17, 2022Kwon did not reveal where he was, saying crypto Twitter has “no business knowing my GPS coordinates.” He added they are defending themselves in “multiple jurisdictions” and look forward to “clarifying the truth over the next few months.”We are in the process of defending ourselves in multiple jurisdictions – we have held ourselves to an extremely high bar of integrity, and look forward to clarifying the truth over the next few months— Do Kwon (@stablekwon) September 17, 2022

Singapore does not have an extradition treaty with South Korea, but the SPF stated it will assist Korean authorities within the scope of its domestic laws and international obligations and didn’t provide any further details.In May, the Terra ecosystem Kwon co-founded arguably had the biggest crash in cryptocurrency history after its algorithmic stablecoin TerraUSD Classic (USTC), originally TerraUSD (UST) lost its US dollar peg to hit a low of $0.006 in June.Its sister asset, now known as Terra Luna Classic (LUNC) met a similar fate with an all-time low of $0.0000009 in May after hitting its all-time high of over $119 the month prior. The twin collapses caused panic among traders, with selling pressure leading to a wider collapse in the digital asset market.Related: Collapse of Terra blockchain ecosystem forces talent migrationPreviously, South Korean prosecutors banned Terra employees from leaving the country in June to stop the possibility of them fleeing to avoid investigation, Do Kwon was already residing in Singapore at the time.In July, South Korean authorities raided 15 firms including seven crypto exchanges connected to the collapse of Terra reportedly gaining access to data related to USTC and LUNC transactions.

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Crypto insurance a ‘sleeping giant’ with only 1% of investments covered

While on-chain insurance has been around since 2017, only a measly 1% of all crypto investments are actually covered by insurance, meaning the industry remains a “sleeping giant,” according to a crypto insurance executive.Speaking to Cointelegraph, Dan Thomson, the CMO of decentralized cover protocol InsurAce said there is a massive disparity between the total value locked (TVL) in crypto and decentralized finance (DeFi) protocols and the percentage of that TVL with insurance coverage: “DeFi insurance is a sleeping giant. With less than 1% of all crypto covered and less than 3% of DeFi, there’s a huge market opportunity still to be realized.”Though plenty of investment has poured into smart contract security audits, on-chain insurance serves as a viable solution for digital asset protection — such as when a smart contract is exploited or the frontend of a Web3 protocol is compromised. The collapse of Terra (LUNA) and the resulting depeg of Terra USD provides a textbook example of how on-chain insurance can protect investors, notes Thompson, adding that InsurAce “paid out $11.7 million to 155 affected UST victims.” “Hacks in 2021 in DeFi alone accounted for $2.6 billion in losses” amounting to $10 billion in the wider crypto space, and “we’re way past that in 2022 already,” Thomson added, emphasizing the need for on-chain insurance for digital assets. Discussing whether traditional insurance firms may eventually offer crypto-focused products, Thomson said while it has piqued the interest of traditional firms, they have not yet moved into the space “due to their own regulations and compliance,” adding: “I do not believe the larger traditional insurance companies will develop their own native apps for the space, but will prefer to offer a type of reinsurance as a way of getting exposure.”Thomson said that on-chain insurance protocols have also suffered some setbacks of their own however, noting that capacity has stalled the growth of on-chain insurance protocols:“Capacities are limited by underwriting [which is] something traditionally done with reinsurance but in DeFi it’s done by stakers and therefore limited by TVL [which makes it] hard for most protocols to build sufficient liquidity.”This problem is exacerbated by the fact that on-chain insurance providers struggle to offer capital providers with attractive investment returns, which in turn discourages liquidity provision, he said. Thomson said his firm is now looking to resolve this capital efficiency issue by utilizing reinsurance from traditional insurance firms as a means to “turbo-charge growth through the bear market,” adding: “To fix this we will be one of the first protocols able to bridge back to gain access to the traditional reinsurance to supplement our existing underwriting from staked assets.”Some cryptocurrency exchanges currently provide insurance services, but very few crypto-native protocols specialize in on-chain insurance.Related: The increasingly acute need for crypto-native insuranceOn-chain insurance services vary from protocol to protocol, but most protocols require users to specify the smart contract address they want coverage for, along with the amount, currency, and time period in order to generate a quote. Many protocols then use a decentralized autonomous organization (DAO) and a token to allow token holders to vote on the validity of claims. Among the other top on-chain insurance protocols include Nexus Mutual and inSure DeFi.

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Algorand Foundation outlines $35M exposure to crypto lender Hodlnaut

The Algorand Foundation has revealed a $35 million USDC hole in its balance sheet as a result of exposure to embattled cryptocurrency lending firm Hodlnaut, which has paused withdraws since Aug. 8. Algorand is an institutional-grade blockchain infrastructure with embedded smart contract functionality. The Algorand Foundation is a not-for-profit community organization focused on developing the Algorand ecosystem.The announcement was made on the Algorand Foundation website on Sept. 9, with the Foundation stating that it’s “pursuing all legal remedies to maximize asset recovery.” Hodlnaut’s financial situation first fell into deep waters when its $300 million investment into TerraUSD (UST) on the Anchor protocol fell dramatically following the de-pegging of UST and collapse of the LUNA token, resulting in the crypto lending firm pausing withdrawals and halting all trading activity, citing a liquidity crisis. Weeks later, the firm was placed under interim judicial management, a form of creditor protection program, by the Singapore court. Today we informed the community about our USDC exposure to Hodlnaut after they suspended withdrawals from their platform on August 8, 2022.The full details can be found here: https://t.co/4pLkSiKW7b— Algorand Foundation (@AlgoFoundation) September 9, 2022The Algorand Foundation said the majority of the investment locked on the platform consisted of “locked, short term deposits,” but are now inaccessible due to Holdnaut’s suspension of withdrawals.However, the Algorand Foundation notes that the $35 million represents less than 3% of the Foundation’s assets and they “do not anticipate [any arising] operational or liquidity issues,” and added that the “funds were a surplus to day-to-day requirements”:“We invest a portion of our surplus treasury capital to generate yield for the purpose of Algorand ecosystem development, and these funds were invested for that purpose.”Embattled crypto lender Hodlnaut is now subject to an Interim Judicial Management to resolve its liquidity issues. Related: 3AC: A $10B hedge fund gone bust with founders on the runUnder Singaporean jurisdiction, corporate entities are placed under Interim Judicial Management for debt restructuring purposes in order to preserve and protect assets at risk prior to onset of legal proceedings.The Algorand Foundation has played a key role, noting that on Aug. 29, the Singapore High Court appointed the Foundation’s nominees Angela Ee along with Aaron Loh of EY Corporate Advisors to act as the Interim Judicial Managers for Hodlnaut, aimed at preserving Hodlnaut’s asset until further court action begins.

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