A probe has been launched into Do Kwon’s Terraform Labs over alleged embezzlement of the company’s bitcoin.

South Korean law enforcement agencies are investigating Terraform Labs following last month’s collapse of their controversial algorithmic stablecoin, TerraUSD (UST), according to a report by the Financial Times.

The Seoul Metropolitan Police Agency has launched a probe into allegations of embezzlement of an undisclosed amount of Terra’s bitcoin holdings, the report said.

Terra held $3.5 billion worth of bitcoin (BTC) in its reserves, in a failed attempt to stabilize the price of UST.

Terraform co-founder Daniel Shin denied allegations of fraud, telling the FT that there was “no intention of deception” and that the company wanted to innovate the payment settlement system using blockchain technology.

Last month South Korean authorities estimated that around 280,000 of its citizens had been impacted by the collapse of UST and Luna (LUNC).

Since the implosion of Terra’s stablecoin, the company has launched a new token (LUNA) that was airdropped to previous holders. LUNA is currently trading at $3.12 with a market cap of $642 million and has lost 80% of its value since last week’s peak.

Terraform Labs did not immediately respond to CoinDesk’s request for comment.

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