- The assets are tied with former and incumbent CEOs of Terraform Labs’ affiliate blockchain consultancy firm Kernel Labs.
- The associates are accused of engaging in selling pre-issued Terra tokens to make illegal profits.
The Seoul South Korean court has ruled to freeze assets of approximately 120 billion Korean won (US$93.3 million) belonging to seven former associates of collapsed Terraform Labs Pte. Ltd. The assets are tied with former and incumbent CEOs of Terraform Labs’ affiliate blockchain consultancy firm Kernel Labs.
The seven associates are accused of engaging in selling pre-issued Terra tokens to make astronomical profits. Local prosecutors also allege that the associates issued Terra stablecoin and Luna tokens without telling investors that the tokens could not be adopted as payment measures. Kernel Labs CEO Kim reportedly holds the largest amount in illegal proceeds from Terra, with his illegal gains amounting to at least 79 billion won ($61 million).
Kernel Labs was founded in 2018 and is headquartered in Seongdong District in eastern Seoul. Kim Hyun-joong, Kernel Labs CEO, has earlier worked as vice president of engineering at Terraform Labs.
As per local media reports, Kim utilized illegal gains for Terraform Labs to splurge on expensive real estate purchases. Last month, Kim bought a building in Gangnam-gu for 35 billion won ($27 million). In June, he purchased an apartment in Seongdong-gu for $7 million.
Apart from Kim, prosecutors claim that another Kernel Labs executive, a former CEO, also received $31 million in illegal proceeds from Terra. The names of the other associates still need to be revealed.
The latest development comes a month after South Korea’s court approved the prosecutors’ request to freeze US$104 million in assets belonging to Terraform Labs cofounder Shin Hyun-seung, also known as Daniel Shin.
Terraform Labs CEO Do Kwon is still at large and has been added to Interpol’s Red Notice list. According to South Korean prosecutors, fugitive crypto executive Do Kwon is currently hiding in Serbia. According to a Dec. 3 report from South Korea’s Yonhap News Agency, Do Kwon was unlikely to return to the country.
The implosion of the Terra ecosystem happened in May, triggered by the de-pegging of its algorithmic stablecoin Terra USD Classic, USTC, which also caused its sister asset Luna Classic, LUNC, to crash even lower. UST’s uncollateralized design only added to the severity of the implosion.