South Korean prosecutors investigating the Terra-LUNA collapse on Tuesday requested a bench warrant for Terraform Labs cofounder Daniel Shin and seven other Terra associates, Seoul Southern District Prosecutors’ Office prosecutor Choi Sung-kook confirmed with Forkast.
A bench warrant is similar to an arrest warrant but allows law enforcement to take suspects into custody, according to law firm Alband, Lane & Balderrama.
The request will undergo a court review, or a direct judgment of warrant, on Dec. 2. Prosecutors require the court’s approval before issuing the warrant.
South Korean prosecutors are looking to charge Daniel Shin – whose real name is Shin Hyun-seung – and the others with fraud, violation of the Capital Markets Act and the Electronic Financial Transactions Act, and breach of duty.
Prosecutors accused Shin of making illegitimate profits of over 140 billion Korean won (US$106 million) through the LUNA cryptocurrency, promoting the Terra stablecoin as a payment method despite multiple warnings from regulators, and misusing users’ private information of Chai Corporation to promote Terra-Luna. Shin founded and served as CEO of payments tech firm Chai from 2019, but reportedly stepped down earlier this year.
See related article: Terra-Luna cofounder Daniel Shin may face fraud charges in South Korea, prosecutors say
Shin has denied such allegations, saying he sold over 70% of his Luna holdings before the price surge, and still held a significant amount of LUNA during the collapse in May. Shin also claims that the financial authorities have never expressed their disapproval for incorporating crypto in e-commerce payments.
Shin founded Terraform Labs, which issued the Terra stablecoin and sister LUNA cryptocurrency with Terra CEO Kwon Do-hyung, or Do Kwon, in 2018. Shin and Chai claimed that they cut ties with Terraform Labs and Kwon in the first quarter of 2020 before any sign of collapse.
The seven others included in the warrant include early investors and engineers of Terraform Labs, some of whom prosecutors believe had a hand in developing the collapsed Terra stablecoin and sister LUNA cryptocurrency. It is reported that one of the individuals is the CEO of Kernel Labs, a blockchain consultancy firm established by former Terra developers.
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, but the whereabouts of the Terra CEO remain unclear. Prosecutors confirmed with Forkast that Do Kwon last flew from Singapore to Dubai, and on to Europe.
See related article: South Korea freezes Terra cofounder Daniel Shin’s US$104 mln in assets; CEO Do Kwon tweets he was wrong, not fraudulent