Terraform Labs Co-Founder Faces Legal Proceedings in South Korea: Report

Shin Hyun-Seong, widely known as Daniel Shin, the co-founder of Terraform Labs, has reportedly undergone his initial court hearing for charges related to alleged illegal profits associated with the sale of Terra (LUNA) tokens.

According to a recent report by News1 Korea on July 10, a trial preparation hearing commenced at the Seoul Southern District Court for Shin and seven other alleged accomplices. The indictment against Shin, which took place in April, accuses him of deceiving investors and manipulating token prices through media coverage and transactions starting in 2018. These actions purportedly resulted in unfair profits amounting to approximately 462.9 billion won (over $354 million at the time of reporting).

It is reported that Shin sold around $118 million worth of LUNA tokens before the token’s price experienced a significant crash in May 2022. Following this, Shin went on to establish the fintech company Chai Corporation, where similar tactics were allegedly employed to generate illicit profits from investor funds.

Shin’s legal representative has previously refuted claims that he “sold Luna at a high point and realized profits or that he made profits through other illegal methods.” Notably, Shin’s LinkedIn profile indicates that he has not been actively involved with Terra since January 2020. However, this information might not encompass any investments made with the company’s stock or tokens.

Another Terra co-founder, Do Kwon, was arrested in Montenegro in March for alleged use of forged travel documents. In June, he received a four-month prison sentence, but potential extradition to the United States or South Korea looms after serving his term. South Korean prosecutors issued an arrest warrant for Kwon in September 2022, accusing him of violating the country’s capital markets laws.

Terra’s collapse in May 2022 acted as a catalyst for the subsequent crash in the cryptocurrency market. The platform’s algorithmic stablecoin, USTC, decoupled from the U.S. dollar, prompting authorities to investigate the alleged involvement of Kwon and Shin in any illicit transactions that occurred before and during the market downturn.

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