Terraform Labs co-founder Shin Hyun-seung, also known as Daniel Shin, was called in for questioning by South Korea’s prosecutors on Monday as part of an investigation into the US$40 billion implosion of the Terra-Luna cryptocurrency and stablecoin project in May last year. Prosecutors have tried and so far failed to convince courts to approve an arrest warrant for Shin.
See related article: Terra cofounder Daniel Shin makes court appearance for arrest warrant review
Fast facts
- Prosecutors in November requested court approval for an arrest warrant on Shin and seven other former Terraform associates based on charges of fraud, violation of the Capital Markets Act and the Electronic Financial Transactions Act, and breach of duty for their part in the collapsed Terra-Luna project.
- However, a Seoul court denied the request with the judge reportedly saying the individuals had cooperated with the investigation so far and there was little likelihood that Shin would flee or destroy evidence.
- Seoul Southern District Prosecutors have not yet decided on making a second arrest warrant request to the court, a spokesperson for the prosecutors’ office told Forkast on Tuesday via text message.
- Seoul prosecutors accuse Shin of fraudulently misrepresenting the Luna cryptocurrency and profiting by as much as US$100 million from selling the token before it collapsed. Shin is also accused of falsely promoting the Terra stablecoin as a payment means after financial authorities said they had warned him not to do so.
- Shin has denied the allegations. Shin co-founded Terraform Labs with Kwon Do-hyung, more popularly known as Do Kwon, in 2018. Shin has said he left Terraform and cut ties with Kwon in 2020. Shin did not respond to Forkast’s email request for comments on Tuesday morning.
- The Terra-Luna project collapsed in May and resulted in losses to hundreds of thousands of investors worldwide. South Korean authorities have issued an arrest warrant and have Interpol’s help in tracking Do Kwon, whose last known location was Serbia.
- Last month, the U.S. Securities and Exchange Commission filed a lawsuit against Terraform and Kwon for allegedly defrauding investors by hosting a “multi-billion dollar crypto asset securities fraud.”
- The Federal Bureau of Investigation and the Southern District of New York prosecutors have been questioning former Terraform employees on a similar basis as the SEC lawsuit, The Wall Street Journal reported last week. It was also reported that the Singapore police have launched an investigation into Terraform Labs, which is based in the city-state.
See related article: S.Korean prosecutors mull second request of arrest warrant for Terra cofounder Daniel Shin