Terra being investigated for insider trading, inflating trade volumes

Lavina Daryanani
Source: The Crypto Basic

The Terra ecosystem collapsed in May, bringing the entire crypto market to its knees. Since then, various regulators have been conducting investigations against the company and its executive Do Kwon. The company has been allegedly called out for insider trading per a recent report.

According to KBS, roughly 250,000 domestic investors had invested in Terra. And one of the main reasons investors flocked to its ecosystem was because it boasted of the “industry’s highest trading volume.”

Back in the day, Anchor Protocol was among the largest DeFi services and kept creating records during the initial few months of the year. However, per KBS, the insiders self-inflated the numbers to garner investors’ trust in the ecosystem’s stablecoin and native cryptos.

Notably, Anchor Protocol’s DeFi services fetched upto 19.5% APYs to TerraUSD deposits.

Chalking out the allegations against Terra

Terraform Labs and its affiliates have been condemned for allegedly boosting the numbers of Anchor Protocol, their DeFi service, by shelling out their capital. Per KBS, state prosecutors are currently investigating the same.

The report contended that large TerraUSD deposits, loans, and collateral service customers on Anchor Protocol were none other than Terraform Labs and its overseas investors. Per the translated version of the report,

“… as a result of KBS’s coverage, it was revealed that a significant part of this service was maintained by Terra’s ‘self-investment’. After analyzing the customer list, it was found that the customers who used Terra’s deposits, loans, and collateral the most were none other than Terra and Terra’s investors.”

The report further asserted that the account with the most deposits in Anchor Protocol was the one Terra seemed to have managed with overseas investors.

“The ‘#1’ account for collateral and loan usage was also Terra and Terra investment companies.”

KBS equated the whole situation to a bank “inflating its performance” with “auto-transactions” by “filling its vaults with money.”

Alongside state prosecutors investigating these claims, a parallel class action lawsuit has been filed in the United States, claiming that CEO Kwon and other investors inflated the crypto’s price.

Read More: Fresh Lawsuit Slammed Against Terra and Others Involved

Korean prosecutors are also looking at another tangent. Revealing the same, KBS noted,

“Domestic prosecutors are also paying attention to allegations of inflating trading volume. In particular, it has been identified that an internal program mobilized for automatic trading is being investigated.