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Terraform Labs Co-Founder Daniel Shin Denies Wrongdoing in LUNA CollapseShin Hyun-seong, popularly known as Daniel Shin, has refuted accusations against him related to the $40 billion collapse of the stablecoin TerraUSD and its companion token, LUNA, according to a report by local news outlet Newspim. He presented this defense during his initial trial at the Seoul Southern District Court on October 30 (local time).Shin co-founded Terraform Labs, the company responsible for issuing TerraUSD and LUNA. His co-founder, Do Kwon, is currently serving a four-month prison sentence in Montenegro for passport forgery.Photo by Tingey Injury Law Firm on UnsplashProsecution’s allegationsKorean prosecutors allege that since 2018, Shin and his colleagues have concealed the fabricated nature of the “Terra project.” By manipulating trades and releasing misleading information, they purportedly misled investors into thinking the project was successful. It’s believed they sold off their tokens before the LUNA crash in May 2022, earning KRW 462.9 billion ($343.3 million) from these activities. They are suspected of personally taking KRW 376.9 billion from this amount.Prosecutors are focusing on Shin as the potential orchestrator of the LUNA crash. They speculate he began selling LUNA tokens around when Terraform Labs launched the Anchor Protocol in March 2021. This DeFi protocol increased the popularity and value of LUNA tokens. Before the crash, Shin is alleged to have gained at least KRW 154.1 billion.Defense argumentHowever, Shin’s legal team countered by asserting that Shin had cut ties with Kwon in 2020. They argued the decline of TerraUSD and LUNA was due to Kwon’s mishandling of the Anchor Protocol and an external attack, neither associated with Shin. Regarding the exploit, Terraform Labs has pursued legal action in the United States Southern District of Florida, claiming that American market maker Citadel Securities played a part in undermining TerraUSD in May 2022.Defending Shin, his lawyers emphasized that at the inception of the Terra project, there were no legal guidelines specifically for cryptocurrency transactions. Additionally, unlike Do Kwon who kept fleeing abroad, Shin willingly came back to Korea and has been cooperating with the investigation. They also noted he received only 32% of the 70 million LUNA tokens initially promised. Regarding classification, they stated LUNA isn’t legally recognized as a security.Shin’s lawyers further argued the prosecution hasn’t clearly identified victims or adequately outlined the components of fraud in this case. They said the prosecution’s case hinges on viewing LUNA as a security. However, Shin’s legal representatives maintained that under the Korean Capital Markets Act, LUNA isn’t a security, making its trades non-fraudulent.To counter a US court ruling the prosecution presented — that a token is a security — Shin’s defense highlighted that the verdict is from a lower court and remains contested. Earlier, prosecutors had cited a ruling from the United States Southern District Court of New York, which classified the XRP tokens sold to institutional investors as securities.

Taiwan Advances Crypto Regulation with Initial Reading of Digital Asset BillTaiwan has furthered its efforts on the path of digital asset regulation, as the nation’s legislature introduced a cryptocurrency bill for its inaugural reading.The “Virtual Asset Management Ordinance Draft” bill represents a significant stride toward establishing a legal framework for digital assets in the country. The proposal passed its first reading at the Taiwanese state legislature, according to published parliamentary records.Photo by Ethan Lin on UnsplashBill objectivesThe primary objectives of the bill are to define virtual assets, establish operational standards for asset operators, enhance customer protection, and make it mandatory for industry players to join relevant associations and secure regulatory permissions.Up until now, Taiwan has maintained a relatively hands-off approach to the cryptocurrency sector. Its oversight was limited to existing know-your-customer (KYC) and anti-money laundering (AML) laws. However, this stance evolved following the collapse of the cryptocurrency exchange FTX in November. The platform’s popularity among Taiwanese users, owing to favorable US dollar interest rates compared to local banks, led to increased regulatory scrutiny.A member of Taiwan’s parliament, Yung-Chang Chiang, told The Block that “after the first reading of the bill, discussions on the regulatory framework for the virtual asset industry have progressed to the next stage.” Chiang added:“We hope that the Financial Supervisory Commission can also submit their version of a draft bill to the legislature, allowing various sectors of society to further consolidate consensus during the process.”In contrast to cryptocurrency regulations in neighboring Hong Kong, Taiwan’s bill does not adopt a strong stance on derivatives or stablecoins. Nevertheless, it recognizes that derivatives linked to virtual assets possess unique characteristics, with a specific mention of perpetual contracts. This recognition opens the door for the possibility of cryptocurrency derivative-specific regulation in future drafts.Importantly, the bill does not restrict the trading of virtual assets to professional investors, which allows broader participation in the digital asset market.Auditing and segregation of fundsUnlike Japan, which mandates the use of custodians for locally licensed exchanges, the draft bill in Taiwan only necessitates the segregation of customer assets from business funds. It does not explicitly require the involvement of third-party custodians.Under this legislation, exchange operators will be obliged to commission periodic reports from accountants regarding their operations and asset management. Additionally, regulators, such as the Financial Supervisory Commission (FSC), will have the authority to conduct regular inspections of exchange internal control and audit systems.Although this initial draft does not explicitly mention “Proof of Reserves,” it does indicate that the regulator will establish standards for asset ratios after consulting with industry stakeholders, with the expectation that licensed exchanges will adhere to these standards.Fostering self regulationTaiwan’s crypto industry stakeholders have expressed their support for formal regulatory oversight. Wayne Huang, co-founder and CEO of Taipei-based fintech company XREX, recently affirmed the industry’s willingness to collaborate with the FSC in defining regulatory operations.In tandem with the establishment of a regulatory framework, regulators have indicated that they want industry stakeholders to move towards some level of self-regulation. That led nine exchange businesses to form an industry association last month.The bill’s second reading is pending, and the FSC is anticipated to provide its input and recommendations before the next phase of the legislative process.

Streami Appoints New CEO, Boosting Hopes for Regulatory Crypto Approval in KoreaStreami, the operator of South Korean cryptocurrency trading platform Gopax, has been struggling for months to obtain approval for the change of its chief executive officer from the financial regulator. This challenge emerged following the significant investment by the global exchange Binance, which became the company’s largest shareholder in February. At that time, Leon Sing Foong, who was the Asia-Pacific head of Binance, was appointed as CEO.Photo by Andriyko Podilnyk on UnsplashCityLabs’ emergenceHowever, the recent appointment of a CEO from a Korean company could potentially represent a turning point for Streami. This development is particularly noteworthy because this local firm has acquired shares in Streami and is expected to further increase its stake in the company.In a report from local news outlet Bizwatch, it was revealed that Cho Young-joong, who currently serves as CEO of CityLabs, has been officially designated as the new CEO of Streami. This appointment now places him in a leadership position overseeing both the smart city infrastructure company and the cryptocurrency exchange operator.Before Cho’s appointment, CityLabs had made investment in Streami, contributing KRW 5.4 billion, which is approximately $4 million. This investment secured CityLabs an 8.55% stake in Streami, equivalent to a total of 76,308 shares of the company.Thanks to this development, Streami has finally filled the CEO position, ending a two-month vacancy that began after the resignation of former CEO Lee Joong-hoon in August. While it has been confirmed by a company official that Cho has been selected as the new CEO, he has not yet assumed his role.Frequent leadership changesIn the course of this year, Streami has already undergone three leadership changes. The stagnant administrative process at the Financial Intelligence Unit (FIU) compelled Leon Foong to step down from his position, which was subsequently assumed by Lee Joong-hoon, Streami’s former Vice President. However, despite Lee’s appointment, little progress was made during his tenure. Additionally, It’s also worth noting that there were reports indicating Leon Foong’s complete departure from Binance in late August.Several industry sources have suggested that Binance is likely to relinquish its status as Streami’s largest shareholder but could later participate in managing the company. The hope is that this strategic maneuver will assist Streami in securing approval from the FIU.