South Korean police have reportedly asked the exchange to “freeze” the assets of the Luna Foundation Guard (LFG), a nonprofit founded to support the Terra (LUNA) cryptocurrency.
The Seoul Metropolitan Police Agency’s cybercrime police department has sent letters to multiple exchanges emphasizing the need to stop LFG-initiated withdrawals of corporate funds, according to a news report published by South Korean state broadcaster KBS on Monday.
According to the report, investigators affiliated with the First Cybercrime Investigation Unit are convinced that embezzled funds related to the LUNA crash were held in LFG accounts and therefore need to be frozen.
However, despite the police request, the report states that the exchange is not currently obligated to comply. KBS noted that since there is no legal requirement to do so, exchanges are free to act as they see fit.
LUNA and TerraUSD (UST) have tumbled this month, with stablecoins de-pegged from the dollar to zero in value. LUNA tokens also plummeted 100%, sparking lawsuits including against Terraform Labs and potentially tougher sanctions from regulators, including South Korean lawmakers.
All of these are question marks over what the LFG will do with the reserves under its control, with the group saying it spent 80,000 BTC trying to save the UST peg.
The foundation’s May 16 update shows that its reserve balance includes 313 BTC, 39,914 BNB, and 1,973,554 AVAX, as well as $1.8 billion and over $222 million in LUNA.
1/ As of Saturday, May 7, 2022, Luna Foundation Guard held a reserve consisting of: 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