South Korean prosecutors ban Terraform Labs employees from exiting the country: Report

Terraform Labs employees are reportedly unable to leave South Korea due to the country’s prosecutors imposing a departure ban on key developers of the project.

On Monday, Korean media outlet JTBC reported that an investigation team from the Seoul Southern District Prosecutor’s Office imposed a travel ban on key team members of Terraform Labs. The ban was put into place to eliminate the possibility of key officials within the company fleeing abroad to avoid further investigation.

The report also highlighted that Terraform Labs CEO Do Kwon, who is a key figure in the investigation, is currently residing in Singapore, which is outside of the country. Because of this, the prosecution may take measures such as invalidating Kwon's passport before launching a more comprehensive investigation into him.

In a tweet, Terra developer Daniel Hong shared that even former Terraform Labs employees have received an exit ban from the government. According to Hong, none of the employees were notified to avoid any possibility of the destruction of evidence as the investigation continues.

stop asking me why i couldn't make it to NYC frens, this is why: the Korean government imposed an exit ban for all ex-@terra_money employees today pic.twitter.com/5Jds99ZNwQ

— Daniel Hong (@unifiedh) June 20, 2022

Hong also expressed disappointment with the ban, saying it shows that employees are being treated as criminals, which he described as “unacceptable.” The developer noted that employees who might have been willing to cooperate may have changed their minds because of the ban. 

Related: Appeals court rules Do Kwon, Terraform Labs must heed SEC subpoena served in September

In May, a famous financial crimes investigation unit dubbed the “Grim Reapers of Yeouido” was revived by South Korea to investigate the collapse of Terra. The team consists of various regulators and will focus on prosecuting fraud and illegal trading schemes.

Meanwhile, exchanges in Korea have formed a new system that would ensure regulatory compliance and make united decisions to prevent another situation like what happened with Terra. The emergency system will be activated within 24 hours if a similar fiasco occurs.