Terraform Labs and affiliates allegedly ramped up the numbers of its decentralized finance (DeFi) service Anchor Protocol by investing their own capital, a claim that South Korean prosecutors are currently looking into, state broadcaster KBS reported.

See related article: S.Korea slaps ‘notification upon arrival’ on Terra’s Do Kwon

Fast facts

  • The local media outlet claims the largest customers in TerraUSD deposits, loans and collateral services on Anchor Protocol were in fact Terraform Labs and its investors. 
  • More specifically, KBS says the account with the most TerraUSD deposits in Anchor Protocol were managed by Terraform Labs and its overseas investors.
  • The Anchor Protocol DeFi service offered up to 19.5% annual percentage yield to users who deposited TerraClassicUSD stablecoin, formerly TerraUSD.
  • Anchor Protocol was among the largest DeFi services at one point, holding 12 billion UST stablecoins in April this year; KBS says the numbers the company allegedly inflated contributed to attracting and gaining trust from investors in Terra’s stablecoin and sister cryptocurrency.
  • The Seoul Southern District Prosecutor’s Office in charge of the investigation told Forkast that they do not dispute the KBS report. 
  • Terraform Labs had not yet responded to Forkast’s request for comment at the time of publication.
  • Last week, another class action lawsuit was filed in California against Terraform Labs and chief executive officer, Do Kwon, who is accused of misleading investors.

See related article: Terra subsidiary used as funds channel for overseas affiliates: report