Seoul Police Open Investigation into Terraform Labs Employee

The Seoul Metropolitan Police Agency has initiated an investigation into one of Terraform Labs’ employees. The agency is examining information concerning potential misappropriation of corporate funds, according to Financial Times.

South Korean media company Chosun Biz reports similar information, citing an agency report. According to the publication, the police stressed that the investigation is not directly related to the company’s head Do Kwon.

Chosun Biz said that the incident occurred in May 2021. Authorities managed to freeze the cryptocurrency that the suspect transferred to the platform of one of the local exchanges. The amount of stolen funds has not been disclosed.

According to FT, the Terra Labs activity has also drawn the attention of the Seoul Southern District Prosecutors’ Office. The agency has received two joint complaints, signed by a total of 81 investors.

The plaintiffs claim that “the founders of Terraform Labs and the company itself misled investors about defective algorithmic coins”.

“We are investigating the case because people filed complaints against the founders, accusing them of fraud and violations of financial regulations,” said a spokesperson for the prosecutors.

Terraform Labs co-founder Daniel Shin, in an interview with the FT, rejected any allegations of fraud. According to him, the company had no intention of deceiving investors — it “simply wanted to implement an innovative payments system”.

Shin added that the project team did not know about the TerraUSD algorithm’s defects and did not attempt to manipulate prices.

Earlier in the media there were reports that for the investigation into the collapse of the Terra ecosystem, South Korean authorities recreated an interagency group, which was disbanded more than two years ago.

In May, journalists also reported on investigations of Terraform Labs employees by South Korean law enforcement in connection with the Terra collapse.