Terra Founder Plans Fork to Rescue Blockchain; Community Set to Vote

Updated by Geraint Price
In Brief
  • Do Kwon proposes fork of blockchain.
  • Preliminary vote shows 80% in favor of the proposal.
  • Binance.US president believes that the fall of UST could accelerate stablecoin regulation.
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Terraform Labs co-founder Do Kwon has proposed a plan to rescue the Terra blockchain. It involves forking a new chain without the stablecoin TerraUSD (UST) as he feels the Terra ecosystem is worth more than UST. 

Terra’s community is set to vote on his proposal but a preliminary vote shows that some of the voters are against his plan to fork the blockchain.

At the moment, 80% of the votes are in favor of the big fork while 0.3% are against it, according to Stake ID. Furthermore, 19.7% have replied, “no with veto.” The deadline for the ballot is May 25.

The UST crash could spell stiffer regulations for the cryptocurrency industry, according to experts. Binance.US president Brian Shroder told the Wall Street Journal that the events surrounding UST “could accelerate the Biden administration’s efforts to regulate stablecoins.”

Terra crash prompts ’emergency’ inspection

In South Korea, the effect of the crash was immediate as financial authorities launched “emergency” inspections of local agencies. The country’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have placed an order to local exchanges to submit data related to the transactions affiliated with UST and LUNA.

“I think they did it to draw up measures to minimize the damage to investors in the future,” said one exchange exec affected by the emergency audit. 

Jeong Eun-bo, head of the FSS noted that the crypto winter coupled with the de-pegging of UST could erase trust in the markets, and regulators around the world need to step up the pace.

LKB & Partners, a leading South Korean law firm, is working on a class-action lawsuit on behalf of LUNA and UST investors. The aim of the lawsuit is to seize Kwon’s properties as relief for the loss suffered by investors, according to Munhwa, a local news publication.

“There are related investors inside the law firm, and we plan to file a complaint against CEO Kwon at the Financial Investigation Unit of the Seoul Metropolitan Police Agency,” said Kim Hyeon-Kwon, a partner of the firm. 

Kwon faces tax evasion charges

And it appears that Kwon’s legal troubles appear to be both civil and criminal. A report claimed that Kwon has been charged with tax evasion on his corporate taxes. If found guilty, the embattled Terra co-founder could face a penalty of up to $78.5 million.

Early in the week, Terra’s in-house legal team resigned amid the chaos surrounding the network. General counsel Marc Goldich, regulatory counsel Noah Axler, and chief corporate counsel Lawrence Folio left their roles without giving any statements.

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