According to a report by The Korea Times, South Korea's financial authorities are considering introducing measures to subject cryptocurrency exchanges to tighter scrutiny in the wake of Terra's failure.
This week, a National Assembly emergency seminar had cryptocurrency on the agenda. The purpose of a two-day meeting was to review the catastrophe involving the Terra stablecoin UST and its sibling token LUNA, which both fell to near zero earlier this month.
Rep. Sung Il-jong of the ruling People Power Party stated, "We must ensure that exchanges play their proper function, and to that end, it is essential that they be subject to strict oversight."
"When exchanges violate rules, they should be held legally accountable to maintain the market's smooth operation," he continued.
According to the Korea Times, some 280,000 South Koreans are believed to have been affected by the sudden decline in UST and LUNA's valuations.
Kim So-young, vice head of the country's Financial Services Commission, stated that the commission intends to establish tight relations with law enforcement "to monitor any criminal conduct in the business and protect investor rights."
Authorities are also investigating whether Do Kwon, CEO of Terra inventor Terraform Labs and a South Korean national, defrauded investors with his cryptocurrency scheme.
In recent months, cryptocurrency has dominated political discourse in South Korea. Yoon Suk-Yeol, the victorious candidate, committed to deregulate the industry so as to "realize the limitless potential of the virtual asset market."
Today, YNA News reported that the Financial Intelligence Unit, the FSC's investigations unit, termed the occurrence a "vortex of death" since the supply of LUNA increased in an attempt to stabilize the price of UST.
According to the Financial Intelligence Unit, there were 100,000 token holders in South Korea prior to the collapse, and this number surged dramatically to 180,000 around 10 days after the UST lost its peg.
In a report by Money Today, it said that the FSS revealed Tuesday that it intends to check the premises of companies that provide financial services related to the Terra blockchain, following its downfall.
Chan-woo Lee, senior vice president of the FSS, said after the occurrence that the likelihood of the issue reaching traditional financial markets was still minimal and that on-site investigations will be performed to mitigate the risks.
These audits will examine Terra-related payment services, the condition of withdrawal funds, and the user protection requirements in place.
