Singapore’s regulatory authority has launched a fresh probe into Terraform Labs, a blockchain company established by Do Kwon, amid tensions over potential regulatory breaches.
The step follows a similar investigation opened by the United States Securities and Exchange Commission (SEC) last year for misleading the public by stating that Terra was decentralized and that TerraUSD was regulated by the firm, not any code. Terraform has been at the forefront of the DeFi revolution, facilitating users with a range of financial services that are decentralized, transparent, and low-cost. However, in recent months Terraform Labs has also been the target of regulatory scrutiny and lawsuits with authorities in the United States, South Korea, and Singapore bothered over its operations.
Why is the Singapore Authority Reportedly Eyeing Terraform Labs?
The regulator is reportedly investigating the firm for fraudulent activities and involvement in the de-pegging of its TerraUSD. Terraform Labs has not responded to the news yet, but the company has previously commented that it is committed to complying with all regulatory requirements in the jurisdictions where it runs.
Implications for Terraform Labs
The new probe is likely to increase regulatory pressure on Terraform Labs and its founder, Do Kwon. The firm has already been suffering from challenges in the United States, where the SEC’s probe is ongoing. Despite these ongoing challenges, Terraform Labs has been working hard to diversify its DeFi offerings. However, Terraform Labs’ path to success seems to be filled with many obstacles, since last year’s UST stablecoin and its sister token luna also dropped, leading to a sell-off in the cryptocurrency markets.