Terra faces more Backlash from South Korean Regulators

The financial regulatory authorities from South Korea have grown more aggressive towards Terra. Their investigation network is no longer limited to Terraform Labs but it has expanded to any entities linked with the company.

Now, the regulators are aiming to conduct onsite inspections that are being carried out against domestic companies. The companies being inspected/investigated are the ones that have a link with Terraform Labs. The companies have begun with their inspections starting with the businesses that have the closest relationship to Terraform Labs.

Most importantly, the regulators are aiming to investigate the companies that were involved in using the ecosystem coins for Terra (LUNA).

Financial Supervisory Service Comes into Action

Money Today, which is the local media outlet in South Korea, has posted a report surrounding the regulatory action on such businesses. The outlet has claimed that the regulatory authority that will be leading the inspections is the Financial Supervisory Service (FSS).

It will begin its investigation by launching a probe directly on the companies that had established a business relationship with Terraform Labs.

Chai to be Inspected

Among the primary companies being inspected by the probe will be Chai, an e-payment solution backed by SoftBank. The purpose of the probe will be to establish whether the impact of the Terra debacle has spread all across the financial markets or not.

Chai made its debut in the South Korean e-payments market back in 2019. Since then, it had formed an alliance with Terraform Labs and was working closely with the company as a result of the partnership.

Throughout its partnership with Terraform, Chai was responsible for providing payment services that were related to KRT. Chai reportedly provided its services until the end of March 2022.

Going forward, the FSS plans on launching its probe against the companies that were part of the Terra Alliance. These companies were reportedly offering settlement and payment services that were linked with Terra.

The Investigation will Expand to the Past 3 Years

The FSS plans on carrying out its investigation on the companies that had been offering coins of Terra as well as NFTs for the past 3 years.

Although it was claimed by the founder of Chai, Shin Hyun-sung that their relationship ended with Terraform Labs in 2020, services were still being provided to the users.

This is something that has raised concerns among the regulatory authorities and now, the FSS wants to get to the bottom of the matter.

Impact on Terra

The announcement about the FSS launching a probe against Terraform Labs has been made on the same day when Terra is to launch its new token ‘LU’. This is going to impact the overall reputation of Terra and force the investors to take another step backward from supporting Terra.

At the time of publication, LUNA trades at $0.0001682 experiencing a 2.40% plummet in a 24-hour period. The month-to-date performance for LUNA shows it has dipped from $96.4 to its current bottom price.

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