Terraform Labs Co-Founder Indicted in South Korea
Ten individuals linked to the Terra USD collapse have been indicted in South Korea on charges associated with violations of capital markets law, including the Co-Founder of Terraform Labs, Daniel Shin. That’s according to a report published by Bloomberg on Tuesday.
Two of the ten were charged with breach of trust while the remaining eight, including Shin, were charged with illegal trading. Prosecutors confirmed that all of the charged individuals have ties to Terraform Labs, the company responsible for developing the Terra protocol, and the Terra USD (TUSD) stablecoin and Luna cryptocurrency which collapsed in 2022.
It’s understood that the ten individuals were also accused of illegal disclosure of clients’ payment information and the embezzlement of corporate funds. The authorities have claimed that the ten individuals are responsible for causing “astronomical damage” to investors. They estimate that all ten of them took 463 billion won, around $347 million, in profit.
Business interests
Shin co-founded Terraform Labs with Do Kwon in 2018. He left the project in 2020, long before its spectacular failure in 2022. However, he would have profited considerably from the project. Prior to co-founding Terraform Labs, Shin had founded lifestyle commerce company TMON in 2010. Two years later, he founded venture capital and private equity firm, Fast Track Asia while in 2017 he was a founding partner of another venture capital and private equity firm, Bass Investment.
He remains involved in all of those other businesses. Furthermore, Shin founded integrated payments firm PortOne Global in January 2020, immediately upon exiting Terraform Labs. He remains CEO of PortOne Global today.
$185 million frozen
On Tuesday, the Seoul Southern District Prosecutor’s Office outlined that it had frozen assets to the value of 246.8 billion won, approximately $185 million, belonging to those that it has brought charges against. South Korean authorities had previously acknowledged a difficulty in seizing assets related to Terraform Labs Co-Founder Do Kwon. It’s understood that a transfer of funds from Do Kwon to a prominent South Korean law firm is being investigated. Otherwise, the search for funds has led them overseas where it’s understood that Do Kwon purchased real estate in his mother’s name in the United States in a bid to evade asset confiscation.
Free pending trial
Shin remains at liberty pending trial. Back in December, a South Korean court turned down a request to arrest him on the basis that he wasn’t likely to destroy evidence and wouldn’t pose a flight risk.
That hasn’t proven to be the case where his former colleague Do Kwon is concerned. Do Kwon fled to Montenegro where he was recently charged with having entered the country on false documents. Both South Korea and the United States have formally applied for his extradition. In the United States, the Securities and Exchange Commission (SEC) has sued both Do Kwon and Terraform Labs. Terraform Labs subsequently submitted a request to the courts in the US to dismiss the lawsuit, claiming the SEC lacks jurisdiction.
