Grim Reaper - Special Investigation Team Probe into Do Kwon and Terra

On May 18, 2022, Korean news outlets were abuzz with the rebirth of Yeouido Grim Reaper, a specialized investigation organization for financial and securities crimes. The officials also announced that it would investigate the Terra-LUNA case as its first investigation. Here’s the history and background of the investigation team that is dubbed “Yeouido Grim Reaper.”

Origin

During Park's presidency in 2013, the Financial and Securities Crime Joint Investigation Team was created. The team was comprised of prosecutors, investigators and experts from the Korean financial watchdog agencies. It aimed to eradicate manipulators of the stock market. In its first seven months, the joint investigation team delivered 126 people to trial and recovered 24 billion won of illegal profits, which earned its nickname "Yeouido Grim Reaper." Since then, it has arrested 346 people for violations of the Capital Markets Act. 

Death

In January 2020, Moon appointed Choo Mi-ae as the new justice minister. Choo soon after disbanded the joint investigation team under the plan of reorganizing the Supreme Prosecutor's Office due to objections of prosecutors abusing their authority. However, there has been considerable criticism that large-scale financial crimes such as Optimus Lime Asset Management cases were followed since the disbandment of the investigation team.

The investigation team was partially revived in September of 2021 as a "cooperation group." However, it did not have the power to lead the investigation, only to promote cooperation amongst prosecution and financial authorities. The significance of the cooperation group was not lost, as it was seen to signal the rebirth of the Yeouido Grim Reaper.

Rebirth

On May 17, 2022, President Yoon appointed Han Dong-hoon as the Minister of Justice. The Justice Minister had vocally supported a strong prosecution service, and his first official act was to reinstate the Financial and Securities Crime Joint Investigation Team. According to the prosecutors office, the team will track illegal funds, collect evaded taxes, analyze companies and their transactions, and seize criminal proceeds. The team will also work with relevant agencies on cases that are important to society.

LUNA

The day after the inauguration of Justice Minister Han, Yeouido Grim Reaper was reinstated and announced its first investigation case would be Terra ($LUNA). According to a Korean news outlet, the decision to investigate Terra was made after an internal review of this case's "basic legal principles" and suspects it was a Ponzi scheme.

Additionally, Do Kwon and his Terraform Labs have recently been ordered by the National Tax Service to pay around 100 billion won ($78.5 million) for evading corporate and income tax payments.

My Thoughts

The joint investigation team’s primary focus is to re-investigate cases from a previous administration, including Optimus and Lime funds and allegations of politicians being involved in those cases.

The team went after Terra as the first case because of the significant impact it has had on society (with over two hundred thousand Koreans suspected of being affected by LUNA) and a large amount of tax that was evaded.

Interestingly the related official has said the Yeouido Grim Reapers have initially reviewed and believe they have enough to start the investigation of the Terra-LUNA case when Korea’s regulations around crypto and virtual assets are still in a grey area.

With President Yoon set to introduce an all-inclusive cryptocurrency regulation with the Digital Asset Basic Act in 2023, it will be best to monitor this investigation, as it could outline future rules.