The US Justice Department Is Investigating TerraUSD Stablecoin Collapse

Twitter icon  •  Published 1 year ago  •  Hassan Maishera

The US Justice Department is reportedly looking into the TerraUSD stablecoin collapse, nearly a year after the project crumbled.


  • The US Justice Department is reportedly investigating the collapse of Do Kwon’s TerraUSD Stablecoin.
  • The Terra project collapsed last year, wiping over $40 billion from the cryptocurrency in the process. 

Justice Department Casts Its Glances At Terra

Nealy a year after the collapse of the TerraUSD stablecoin and LUNA, the United States Justice Department is currently investigating the events. This is according to a report by the Wall Street Journal, citing sources familiar with the matter.

According to the report, the investigation is raising the possibility of criminal charges being filed against the stablecoin’s creator, Do Kwon.

Terra’s LUNA was one of the top 10 cryptocurrencies by market cap, while its UST stablecoin was only behind USDT, USDC, and BUSD in terms of market cap prior to the collapse of the project.

However, the project collapsed in May 2022, wiping out more than $40 billion from the cryptocurrency market at the time. 

The report revealed that the FBI and the Southern District of New York had interviewed former employees of Terraform Labs, the company behind TerraUSD. The agencies are also seeking to interview others regarding the collapse of the crypto project. 

This latest development doesn’t come as a surprise, as the US Securities and Exchange Commission (SEC) filed a civil fraud lawsuit against Kwon and Terraform Labs in Manhattan federal court earlier this year. 

The SEC accused Terraform and Kwon of misleading investors about TerraUSD’s risks. Sources close to the matter told the Wall Street Journal that the Justice Department’s investigation covers similar ground. 

In a separate report by Bloomberg, Manhattan federal prosecutors are currently looking into chat-group discussions among prominent trading firms Jump Trading Group, Jane Street Group and the now-defunct Alameda Research involving a potential bailout of TerraUSD. 

The bailout never materialized, but the prosecutors are looking into the possibility of whether these firms were involved in possible market manipulation. 

Terra’s collapse resulted in a series of high-profile failures of prominent crypto firms, including FTX, Voyager Digital, and Three Arrows Capital. 

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Hassan Maishera

Hassan is a Nigeria-based financial content creator that has invested in many different blockchain projects, including Bitcoin, Ether, Stellar Lumens, Cardano, VeChain and Solana. He currently works as a financial markets and cryptocurrency writer and has contributed to a large number of the leading FX, stock and cryptocurrency blogs in the world.