The Prosecutor’s Office of South Korea has brought charges against Terraform Labs (TFL) co-founder Daniel Shin and nine company employees, обвинения, in fraud and violations of the Capital Markets Act.
According to investigators, the defendants knew from the outset that the mechanism for maintaining the price of algorithmic stablecoin TerraUSD (UST) using the LUNA token was not working. In May 2022 both assets collapsed, inflicting tens of billions of dollars of damage on the crypto industry.
“The Terra project was a fiction that could not be realised,” — заявил a prosecutor at a press conference.
According to authorities, the defendants inflicted “astronomical damage” on investors, earning 436 billion won (~$347 million). Law enforcement authorities are tracing the illicit proceeds the group earned and have already frozen 247 billion won (~$197 million).
During the briefing, the prosecutor’s office confirmed the information that another co-founder and CEO of TFL Do Kwon transferred 10,000 BTC to the Swiss bank Sygnum. Some of the funds totaling $100 million were converted into fiat and used for various purposes, including legal expenses. Korean law enforcement requested the freezing of the remaining TFL assets in the financial institution, as did their American counterparts.
In March, Do Kwon arrested in Montenegro while attempting to depart the country using forged documents. New York prosecutorscharged him with eight counts, including securities fraud, market manipulation, investor deception, and requested extradition.
In September 2022 a court in Seoul issued an arrest warrant for Kwon. Law enforcement will seek his extradition to South Korea. Regarding the extradition of the detainee together with Terraform Labs’ former chief financial officer Han Chang-joon, prosecutors do not anticipate problems — he is not included in the U.S. request.
The charges against Shin and nine other defendants were brought without their being detained.
Earlier in November 2022, prosecutors sought an arrest warrant for the co-founder of TFL, but the court refused to detain Shin.