Terraform Labs cofounders Daniel Shin (left) and Do Kwon (right)

S.Korea freezes Terra cofounder Daniel Shin’s $104 mln

Posted on

South Korea’s Seoul Southern District Court approved local prosecutors’ request on Thursday to freeze some US$104 million in assets belonging to Terraform Labs cofounder Shin Hyun-seung, or Daniel Shin. Local authorities believed the assets were illegitimately earned through the LUNA cryptocurrency, local media reported.

Earlier on Thursday, Shin reportedly attended the investigation at the local prosecutors’ office where he is under investigation for charges of violating the capital markets law and breach of duty. 

South Korean prosecutors declined to confirm these reports with Forkast

Local prosecutors accuse Shin of allegedly making “unfair” profits of about 140 billion Korean won, or around US$104 million with LUNA cryptocurrency that he attained before the official issuance without proper disclosure to regular investors. 

“It’s a problem with pre-mining. It’s because they did not make proper disclosure in issuing the tokens,” said Hwang Suk-jin, professor of information security at Seoul-based Dongguk University and a regular speaker at South Korea’s National Assembly on cryptocurrency policy. “[For instance], if [investors] thought a thousand tokens have been issued and in fact 10,000 have been issued, investors inevitably suffer losses.”

Shin also faces charges of breach of duty, where he is accused of using the personal information of the customers at Chai Corporation, the payments tech company that he established, to promote Terra’s cryptocurrencies. 

Shin’s fellow Terra cofounder and current chief executive Do Kwon, or Kwon Do-hyung, published a thread of tweets on Wednesday expressing his remorse for the collapse of Terra-LUNA cryptocurrencies but defending himself and his team that there were no fraudulent activities involved with the project.

The crash of Terra’s algorithmic UST stablecoin and sister LUNA cryptocurrency, once one of the most-used crypto tokens especially in the decentralized finance community, has affected hundreds of thousands of investors worldwide and resulted in an industry-wide contagion. 

South Korean authorities have been after Kwon and other Terra associates since the project collapsed in May.

Kwon shared a third-party audit of Terraform Labs and Luna Foundation Guard (LFG) by U.S. auditing firm JS Held that examined their activities in the week of Terra’s collapse in May 8-12, 2022. 

“Terra was not a centralized platform gone bust through misuse of funds or fraud,” Kwon wrote, referencing recent accusations of the bankrupt FTX.com using customer funds to support its sister trading firm Alameda Research.

Terra’s third-party audit report said that LFG, the non-profit organization established to support the Terra ecosystem, spent US$2.8 billion to maintain the dollar peg of TerraUSD (UST) stablecoin during the May collapse.

The report also said that UST issuer Terraform Labs spent US$613 million in defending the stablecoin’s USD peg. 

“In its last moments, we fought to the last to protect UST and its users,” Kwon tweeted. “It is natural to suspect fraud when something goes wrong, but if we sweep all failures in crypto as scams … then we never have opportunities to learn from our mistakes.”

While Kwon insists that the failure of his brainchild was unintentional, South Korea remains on the lookout for the Korea-native CEO of Terraform Labs facing charges of fraud and violation of capital markets act, among others. Kwon’s whereabouts remain unknown despite active pursuit by South Korea and Interpol.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *