Based on reports, South Korean authorities conducting a probe on Terraform Labs and its co-founders Daniel Shin and Do Kwon in connection with Terra's demise, have imposed a restriction on employees' departures.

According to a story published on Monday by a local news source, the Seoul Southern District's joint financial and securities crime investigation section has ordered a hold departure order on senior Terraform Labs personnel. 

South Korean prosecutors have reportedly prohibited Terraform Labs employees from leaving the country earlier.

The unit responsible for investigating Terra's $40 billion debacle, which unraveled during the second week of May, reportedly imposed the departure ban without notifying the affected employees to prevent them from abruptly fleeing the country during the ongoing investigation or possibly destroying evidence.

Former Terraform Labs developer Daniel Hong independently confirmed the JTBC allegation on Twitter Tuesday, stating that he was unable to leave the country because "the Korean government placed an exit ban for all ex-terra employees today."

He stated that the prosecutors had not informed him of the departure ban and later indicated that they rarely inform persons under investigation of travel bans in order to prevent them from destroying evidence or fleeing the country in advance.

JTBC stated last month that the Korean government had summoned all workers of Terraform Labs for questioning. Nevertheless, according to the crypto-sleuth FatManTerra, the authorities had difficulty contacting the employees.

On Tuesday, he responded to Hong's tweets on Twitter by writing:

"They have subpoenaed you (Hong) and all employees of Terra. This has dominated the news coverage. Prosecutors in Korea and our investigation teams have attempted to contact you all, but nearly no one has responded. What do you anticipate? You get what you give."

Hong refuted FatManTerra's assertions, stating that the Korean prosecutors did not contact him and that he had repeatedly contacted out but was continually ignored.

According to several media sources, the special investigations unit is investigating Terraform Labs and its co-founders Do Kwon and Daniel Shin for tax evasion, money laundering, fraud, and operating a Ponzi scheme.

The U.S. Securities and Exchange Commission is also investigating Terraform Labs and its founders on suspicion of illegally selling unregistered securities to U.S. consumers via Terraform Labs' Mirror Protocol platform for synthetic assets.

Kwon and his company lost their appeal to the U.S. Court of Appeals against the SEC's subpoena requests on June 9.