Do Kwon Pushed For UST Launch Despite Knowing Its Flaws, Former Terra (LUNA) Staff Tells Authorities

Terra’s LUNA/USD founder Do Kwon was reportedly aware of critical flaws in its algorithmic stablecoin TerraUSD’s UST/USD mechanism but pushed for the launch anyway.

What Happened: According to a report from South Korean news outlet JTBC, authorities have summoned former employees of Terraform Labs as part of an ongoing investigation into the Terra collapse.

One of the employees involved in Terra’s initial development in 2019 revealed that the team had cautioned against the launch of an algorithmic stablecoin after testing a pilot model which failed.

See Also: IS TERRA (LUNA) DEAD?

“Even at that time, there was a warning inside that there could be a collapse at any time, but CEO Kwon Do-hyeong forced the coin to be launched,” stated the employee.

The employee’s statements were made to South Korean prosecutors as part of an ongoing probe into whether TFL was aware of inherent issues pertaining to UST and allegations of intentional price manipulation.

Meanwhile, Terra launched a new blockchain Terra 2.0 over the weekend. The old chain has been dubbed Terra Classic LUNC/USD and the new chain will retain the Terra name with the native token LUNA.

The new blockchain’s token lost 70% of its value on the first day of its launch. The price has since stabilized around $8.98, after falling to a low of $3.63 on Saturday as per data from Benzinga Pro.

Bitcoin BTC/USD and Ethereum ETH/USD were trading at 31,600 and $1,989 at the time of writing, up 4.6% and 6.1% respectively over the last 24 hours.