According to the Seoul Southern District Court, the first initial session for Terraform Labs co-founder Daniel Shin Terra and seven other former Terra workers was held in South Korea. Shin was charged with many counts of fraud in connection with the defunct Terra-Luna cryptocurrency project on April 25. On the same day as the indictment, Shin’s lawyers contested all of the charges. Let’s explore the facts about the case of Daniel Shin Terra.

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Daniel Shin Terra: Key Points

Daniel Shin Terra put together a group of over thirty lawyers from five of the leading legal companies in the nation.
Prosecutors in South Korea assert that the former McKinsey analyst and Wharton graduate engaged in fraudulent activities, embezzlement, and manipulation of the market.
The hearing continued as Shin’s legal team requested further time to be ready.
Do Kwon, the co-founder is detained alone in a jail in the Balkans as he awaits the conclusion of extradition procedures.

One of Terraform Labs’ original members, Daniel Shin Terra, was accused in South Korea of offenses connected to the since-defunct cryptocurrencies Terra and Luna. Shin was allegedly accused of crimes like fraud, negligence, and embezzlement, according to claims made by Bloomberg and the regional Yonhap News Agency.

According to Bloomberg, nine additional Terra employees, some of whom held positions in management, systems development, and marketing, also faced charges from prosecutors at Seoul Southern District Court. The site states that the accused have had their assets frozen, totaling 246.8 billion won, or about $184.7 million.

In 2018, he founded Terraform Labs with Do Kwon, another co-founder. To theoretically keep Terra’s connection to the dollar, the corporation later that year developed its Luna cryptocurrency and eventually tied the token to it in 2020. Luna suffered a huge financial loss when she and Terra were destroyed together last year.

Daniel Shin Terra: SEC Allegations Against Him

As the United States Securities and Exchange Commission develops its case against Terraform Labs and its co-founder, Do Kwon, it has been granted a motion to seek help from South Korea to investigate the other co-founder of the company, Daniel Shin. South Korea is known as “Terraform Labs.”

On August 16, District Judge Jed Rakoff allowed the SEC’s motion dated July 10 asking if it may seek to question the Terra co-founder and get papers from the Seoul-based payments provider Chai Corporation he formed. The move asked if the SEC could attempt to question the Terra co-founder.

In its filing in July, the SEC stated that it intends to question Dhin Shin Tera on Kwon on Chai’s role at Chai, how Chai utilized the Terra blockchain, and Chai’s statements regarding its connection with Terraform.

It is also curious as to why Chai went their separate way from Terraform. Shin and Kwon established Chai in the middle of 2019, and the two companies shared workplaces and personnel until the two companies went their way in 2020.

Kwon and Terraform Labs added their queries and demands for documents, but they did not object to the SEC’s move. They have already refuted the accusations made by the SEC. The now-collapsed cryptocurrencies TerraClassicUSD (USTC) and Terra Luna Classic (LUNC) — previously Terra (LUNA) and TerraUSD (UST) — were accused of being fraudulent by the SEC when it filed a lawsuit against Terraform and Kwon in February.

Additionally, it claimed that Kwon and Terraform had made up the story that Chai processed and settled transactions on the Terra blockchain.

The SEC asserted that to create the idea that Chai was utilizing the blockchain, Terraform and Kwon allegedly staged transactions of its Korean won-pegged stablecoin, TerraKRW (KRT). In May 2022, Terra’s linked cryptocurrency ecosystem imploded, wiping out over $40 billion in value and taking the entire cryptocurrency market with it.

Prosecutors in South Korea levied several fraud accusations against Daniel Shin Tera in April, claiming that he concealed the dangers associated with purchasing cryptocurrency from Terraform.

Kwon attempted to flee the nation using a fictitious Costa Rican passport, and as a result, he is presently serving a four-month prison sentence in Montenegro.

Kwon is facing criminal charges in both South Korea and the United States in addition to the SEC’s lawsuit. His extradition has been sought by both nations.

Daniel Shin Terra: Multiple allegations

The prosecutor indicted him and many other members of Terra’s staff on April 25th, accusing them of embezzlement, fraud, breach of duty, and violating the Capital Markets Act of South Korea.

According to the prosecution, Shin engaged in market manipulation by profiting from the sale of pre-issued Luna tokens before to their fall, netting him 140 billion won ($104 million), all without providing the required information.

Additionally, they allege that to launch Terra’s payment integration company, one of his other businesses, Chai Corporation, a provider of payment solutions, improperly exploited the private information of its clients without authorization.

All of the allegations have been refuted by Daniel Shin Tera and his attorneys, who are said to include former judges and prosecutors.

Daniel Shin Tera: Expected reconciliation

Shin’s attorneys requested further time to prepare during a preliminary hearing in the Seoul Southern District Court, leading to the postponement of the case until August 28.

For Daniel Shin Terra, it was an additional postponement in a much-awaited reckoning. After it became out that the chief judge, a former business writer, had written a profile on Shin in 2010, the initial hearing, which was supposed to take place on May 26, was postponed.

Daniel Shin Terra has maintained a quiet profile since the collapse of Terra, in contrast to Kwon, 31, a publicity-hungry businessman who couldn’t resist giving online interviews and posting on social media even while he was sought by Interpol.

An e-commerce entrepreneur and University of Pennsylvania Wharton School alum, Shin co-founded Terraform Labs with Do Kwon (Kwon Do-hyeong) in 2018. Shin, 38, was undoubtedly the more seasoned businessman, even if the latter frequently stole the show.

Unicorn Standing

Following a year as an analyst at McKinsey, Shin established TMON (Ticket Monster) in 2010, a well-known e-commerce site that provides Korean customers with good discounts. It became a unicorn in 2017 when it raised $115 million at a $1.2 billion value.

In addition, he co-founded the venture capital firm BASS Investment and Fast Track Asia, which assists Western businesses in expanding into Asia.

The first thing that drew Daniel Shin Terra to the blockchain was its ability to reduce payment costs for both consumers and e-commerce platform providers while maintaining security and sustainability.

Although other providers provided reduced transaction costs, he said in a 2019 interview with The Korea Times that “there weren’t many alternatives once you took into consideration key aspects such as long-term viability stability, trust, security, speed, and convenience.”

However, what if you could use blockchain technology to cut out middlemen and make payments safer, quicker, more convenient, and, of course, less expensive? For many e-commerce businesses, it may be a game-changer, he added.

Daniel Shin departs Terra

Early announcements of partnerships from Terra included TMON and Chai Corporation, two of Shin’s other companies. Additionally, he led an initiative to establish a peer-to-peer payment system in Mongolia with Terra and the government.

However, Shin quit Terra in late 2019 for unspecified reasons and seems to refocus on Chai Corp. Although it claims to have had no contact with TFL after early 2020, it implemented Terra’s won-pegged stablecoin in 2019.

It’s possible that he and Kwon had different ideas about how they wanted the business to grow. Shin talked about payments and e-commerce during interviews. Stanford computer science student Kwon seems more interested in exploring blockchain technologies.

However, in April, Dan Sung-han, the head of the financial crime squad at the Seoul Southern District Prosecutors’ Office, said that he thought Shin was more involved in the scam than Kwon. According to him, Shin created the impression that Terra was used to handle fiat payments on Chai Corporation.

Twice, the prosecutor’s office requested an arrest warrant for Shin; however, the request was denied, therefore Shin is still at large.

Suspects in organized crime

Kwon, on the other hand, is detained in Spuz Prison’s pre-trial detention section in Montenegro. He and a companion were apprehended trying to depart the Balkan state on a private plane using a fake Costa Rican passport a few months after leaving Singapore in 2022. The jail is overcrowded and holds a large number of suspects and convicted members of organized crime, according to DL News’ June report.

After being found guilty in June of using a fake passport, Kwon and Han Chang-Joon are currently being held while US and South Korean authorities pursue their extradition. Kwon was charged with fraud earlier this year by a US grand jury.

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Conclusion

In conclusion, regarding the Terra and Luna cryptocurrency project, Daniel Shin Terra, co-founder of Terraform Labs, is being accused in South Korea of several counts of fraud, embezzlement, and manipulation of the market. He is charged with these offenses, along with several former Terra workers, and their assets have been frozen. Strongly disputing these accusations are Shin and his legal team.

The legal case of Daniel Shin Terra was proceeding independently in South Korea, while his co-founder, Do Kwon, is dealing with legal issues of his own, including an SEC complaint in the US and criminal accusations in both the US and South Korea. He still maintains his innocence, despite the delays in his judicial actions.

The once-dominant blockchain project has taken a hit with the collapse of the cryptocurrency ecosystem Terra in May 2022, which was accompanied by allegations and legal activities against its co-founders. The public and the Bitcoin community will be keenly observing the results of these well-known trials as legal matters develop.

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