As per reports, South Korea’s financial watchdog has announced an investigation into companies that provided financial services to Terra, as part of a larger effort to gauge and manage the impact of the LUNA-USTs crash on the local crypto market.
According to local news reports, South Korea’s financial regulator, The Financial Supervisory Service (FSS), announced that it would conduct on-site inspections of companies that provided financial services to Terra.
The meeting also established stronger monitoring of domestic, and foreign virtual asset markets. It proposed that the regulator should consider reorganizing the existing FSS blockchain forum into a ‘virtual asset risk forum’ by involving industry officials.
The investigation was announced during an emergency meeting on the ‘Enactment of the Digital Asset Framework Act and Emergency Inspection of Coin Market Investor Protection Measures’, which was held at the National Assembly Hall on Tuesday.
During the meeting, Senior vice president of the Financial Supervisory Service, Chan-woo Lee, said,
“The possibility of the Terra crisis affecting the financial market is still low, but in order to prevent risk transfer to the financial market, on-site investigations were conducted on some companies that provide financial services in connection with the issuer or related virtual assets. We will conduct an inspection”
The regulator also said that it would conduct extensive research into the risk of virtual assets circulated in domestic exchanges. Earlier, a local media firm had stated that representatives of crypto exchanges UPbit, Bithumb, Coinone, and Korbit, could be held accountable for the damage to local LUNA and UST investors.
Terra’s LUNA needs a lifeboat
FSS’ direction comes as financial bodies scramble to come up with remedial measures following Terra’s crash, which wiped huge investor savings. It was recently reported that a crypto exchange in Brazil was ready to reimburse those holders who invested in UST prior to the market sell-off.
Meanwhile, LUNA’s price continues to roll in the doldrums, trading close to $0.0001619 at press time compared to its ATH of $125 just over a month ago.
The Financial Supervisory Service said that structural weakness in algorithms, price drop due to short selling attacks, and Luna Foundation’s insufficient response were mainly responsible for the Terra-LUNA wipeout.