Terraform Labs and the Luna Foundation Guard (LFG) may have conducted price manipulation using billions in stablecoins, a report alleges.
Blockchain security company Uppsala Security and CoinDesk Korea jointly conducted an investigation into the flow of funds, publishing research findings indicating that illicit activities may have taken place.
The two parties used on-chain data forensic techniques to study how Terraform Labs and the LFG moved funds around. It lists four different addresses as being particularly important and shows how TerraUSD (UST) was exchanged for Magic Internet Money (MIM) and finally into Tether (USDT).
The first wallet, called “interchange wallet A,” was used to convert over three billion UST in MIM and then USDT. The “distribution wallet A” was used to transfer approximately 2.36 billion UST to the interchange wallet, while “exchange wallet A” received over 1 billion USDT from interchange wallet A.
The gist of the report is that these wallets were used to send funds to centralized and decentralized exchanges – including Abracadabra, Binance, and Curve.
The movement of these undisclosed funds drew suspicion, and now the community will have to look into it further to see how suspect it actually is.
Terraform Labs’ troubles getting worse
Terraform Labs is already being besieged with several investigations. South Korean authorities are looking at the company and Do Kwon, while the United States Securities and Exchange Commission is also conducting its own probe.
It is important to note that Uppsala Security’s report does not explicitly state that there was any manipulation or money laundering. The report reads: “For what purpose were such large sums of USDT created, and what ultimately happened to this USDT deposited into these exchange accounts? Unfortunately, this is not something we can answer, as all we can provide are facts based on on-chain data.”
But if Terraform Labs and the LFG have indeed conducted illicit activity with these funds, then the matter could get worse. Besides this, allegations against Do Kwon have also arisen, stating that he cashed out $2.7 billion from Terra.
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