Key Takeaways
- The motion allows the SEC to question Daniel Shin, co-founder of Terraform Labs, and gather documents Chai Corporation
- District Judge Jed Rakoff granted the SEC’s request to use a process established by a 1970 treaty for international evidence gathering
In a significant development, the United States Securities and Exchange Commission (SEC) has received approval to seek South Korea’s assistance in its ongoing legal case against Terraform Labs and its co-founders. The motion enables the SEC to conduct interviews with Daniel Shin, a co-founder of Terraform Labs, and gather essential documents from Chai Corporation, a payment provider based in Seoul, which Shin also played a role in establishing.
The SEC’s lawsuit revolves around allegations that Terraform Labs and its former CEO, Do Kwon, engaged in an illicit scheme that led to the erosion of more than $40 billion in crypto value. District Judge Jed Rakoff granted the SEC’s request to utilize a procedure outlined by a 1970 treaty, designed for obtaining evidence across international borders.
Central to the SEC’s interest in interviewing Shin is his intricate involvement with both Terra and Chai. The regulatory body intends to delve into Kwon’s responsibilities at Chai, Chai’s utilization of the Terra blockchain, and the extent to which Chai divulged its ties to Terraform. Additionally, the SEC aims to uncover the reasons for Chai’s separation from Terraform. Chai Corporation, which Shin and Kwon co-founded in 2019, shared resources with Terraform until their split in 2020.
While Terraform Labs and Kwon have not opposed the SEC’s request, they have presented their own set of queries and document demands. Their stance remains one of denial towards the SEC’s accusations.
The legal intricacies of this case extend beyond U.S. borders. In recent times, Do Kwon faced a four-month prison sentence in Montenegro for document forgery. Kwon’s arrest unfolded against the backdrop of international authorities seeking his extradition on charges related to the downfall of Terra, a multi-billion-dollar cryptocurrency enterprise, in May 2022. Notably, both South Korean and U.S. authorities have requested Kwon’s extradition.
