South Korean Authorities Indict Terra Co-Founder Shin and Nine Others

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Key takeaways:

  • Officials in South Korea froze assets linked to Shin and nine other indictees worth ($184.7 million).
  • Following an 11-month inquiry into the demise of Terra, 10 Terraform Labs employees, including co-founder Hyun-seong Shin, have been charged.

According to reports, Terraform Labs co-founder Shin Hyun-seong and nine other people have been indicted by the financial crimes division of the Seoul Southern District Prosecutors’ Office for the demise of the Terra stablecoin ecosystem. 

After an 11-month investigation, the ten people were reportedly indicted on accusations of fraud, breach of trust, and embezzlement and sent to trial. According to Yonhap News Agency, the prosecutor’s office has suspicions that those responsible for the collapse collected criminal earnings totaling around $350 million (460 billion won).

Despite being aware that the project was unworkable, Shin is accused of deceiving investors and falsely advertising the product in order to generate substantial losses. The assets of the defendants have also been taken by the prosecution, which put their total value at $180 million (246.8 billion won).

A district court in Seoul recently ruled that the Luna (LUNA) token is not a security and is not covered under the Capital Markets Act, prompting the prosecutor’s charge. Before now, the prosecution’s ten demands for charges against Shin for breaking the security statute had been rejected by the court.

Do Kwon vanished shortly after the implosion and was charged with similar claims of breaking the Capital Markets Act by prosecutors in late 2022. In September, Interpol issued a red notice requesting that international law enforcement locate and detain the 31-year-old Kwon.

It has only been a month since former CEO Do Kwon was detained in Montenegro; Shin and nine other executives have already been charged. Kwon was indicted by prosecutors in Montenegro for forging documents. The US Securities and Exchange Commission has also filed numerous securities fraud accusations against Kwon. In relation to the Terra collapse, Kwon’s extradition is being sought by both South Korea and the US.

The idea of algorithmic stablecoins was made famous by one of the emerging crypto ecosystems, Terra. The $40 billion ecosystem, however, collapsed in May 2022 when the local stablecoin TerraClassicUSD (USTC) de-pegged from its dollar value.

The CEO of Terraform Labs, Do Kwon, reportedly paid $7 billion to the prestigious South Korean legal firm Kim & Chang just before the Terra collapse occurred on May 9, 2022, according to the most recent report from the South Korean authorities.

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