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Court denies warrant for Terraform co-founder over cryptocurrency collapse

All News 08:54 December 03, 2022

By Kim Han-joo

SEOUL, Dec. 3 (Yonhap) -- A Seoul court denied a warrant on Saturday to detain Daniel Shin, co-founder of Terraform Labs, on charges of gaining illegal profits before the massive collapse of the blockchain firm's cryptocurrencies.

Prosecutors have also sought warrants to arrest three other Terraform Labs investors and four engineers of the firm's cryptocurrencies -- TerraUSD and Luna.

Terraform Labs has been under investigation for alleged fraud and tax evasion after investors filed complaints against Do Kwon, another co-CEO, in May. An Interpol red notice has been issued for Do, whose whereabouts are still unknown.

Prosecutors suspect Shin stored Luna -- which had been pre-issued without notifying regular investors -- and pocketed illegal profits worth 140 billion won (US$105 million) by selling the tokens at a high point.

Judge Hong Jin-pyo of the Seoul Southern District Court denied the warrant to detain the 37-year-old entrepreneur despite acknowledging the heavy nature of his crime.

The court also denied the warrants to detain the seven others.

While there is currently no legal clause on stablecoins and bitcoins under the Capital Markets Act, prosecutors said they view the Luna cryptocurrency as a financial investment security.

Charges against Shin also include violating the Electronic Financial Transaction Act, as the customer information and funds of the fintech firm Chai Corp. were allegedly used to promote Luna, prosecutors said.

Shin has refuted any ties with Terraform Labs following his departure from Do in March 2020, when he moved on to found Chai. Shin stepped down as CEO of Chai earlier this year.

Daniel Shin, co-founder of Terraform Labs, arrives at the Seoul Southern District Court on Dec. 2, 2022. (Yonhap)

Daniel Shin, co-founder of Terraform Labs, arrives at the Seoul Southern District Court on Dec. 2, 2022. (Yonhap)


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