Will crypto exchanges face the law because of the collapse of Terra?

South Korean police are trying to freeze any Moon-related funds on the country’s largest crypto exchanges.

Notifications from the police demanding the confiscation of funds were received by cryptocurrency exchanges in South Korea. The Korean authorities in their notification called on crypto exchanges to prevent the withdrawal of funds associated with the Luna Foundation Guard.

An important note is that the Metropolitan Police Department claims that evidence has been found that could link the organization to the thefts.

But from a legal point of view, this requirement is subject to enforcement by law. Each exchange can choose how they would like to respond, but it is not yet known how they will react.

Korean lawmakers have seriously engaged in the investigation. It will culminate in meetings with the heads of crypto exchanges. Among them: Upbit, Bithumb, Coinone, Korbit and Gopax. Since they are not required to comply, this meeting is probably an attempt to put pressure on the leaders of these exchanges.

Newspim reports that Yoon Chang Hyun, chairman of the Special Committee on People’s Strength Virtual Assets, wrote on Facebook:

“We will check the exchange’s investor protection measures.”

Newspim also reported that the National Assembly of Korea is taking the initiative to regulate penalties for crypto exchanges that are responsible for the damage caused by the collapse of Terra to investors.

Moreover, several well-known Korean investors demanded that Do Kwon, CEO of Terraform Labs, be sued for the collapse of the TerraUSD (UST) stable coin.

The collapse of terra forced government authorities to pay attention to cryptocurrencies and exchanges. This has led to the situation that besides Do Kwon and the Terra team, crypto exchanges can also be held accountable.