ⓒYONHAP News

Financial authorities have begun investigating a massive cryptocurrency crash involving TerraUSD and its sister token Luna as they seek to determine ways to prevent similar losses for investors in the future.

A related source told local media on Tuesday investigators have asked domestic cryptocurrency exchanges to submit relevant data, including the scope of local investors, transaction volume and price trends.

Some 280-thousand traders in Korea are believed to have invested in TerraUSD and Luna through local exchanges.

Authorities are also looking into whether Korean service providers implemented appropriate policies and protective measures after the latest debacle.

Chairman of the Financial Services Commission Koh Seung-beom told lawmakers that although governmental recourse is limited due to a lack of legal authority, officials are keeping a close eye on the numbers such as prices or transaction trends.

Investors in TerraUSD and Luna have also filed a complaint against the CEO of the company in the wake of their massive crash.

LKB and Partners, the law firm representing investors who suffered steep losses, said on Thursday that it submitted the complaint to the Seoul Southern District Prosecutors Office, accusing Terraform Labs and its CEO Do Kwon of fraud.

The law firm argues Kwon and others did not properly disclose errors and flaws in the design algorithm of the cryptocurrencies as they issued coins and attracted investors. It argued the issuance of an unlimited volume of Luna also constituted fraud.

Kwon is also accused of luring investors by guaranteeing an unsustainable return on interest.

Investors reportedly want stern punishment and swift recovery of losses incurred.

Prosecutors will first determine whether the nature of the case justifies a direct investigation.

The complaint was submitted specifically to a newly launched unit at the prosecution that exclusively deals with financial and security-related crimes.