SEC wants to question Terra’s Daniel Shin, could ask South Korea for help

Danny Park

9 months ago

The U.S. SEC could call for South Korea’s cooperation in questioning Daniel Shin, co-founder of Terraform Labs

The U.S. Securities and Exchange Commission (SEC) could call for South Korea’s cooperation in questioning Daniel Shin, co-founder of Singapore-based blockchain payment platform Terraform Labs, on fraud charges related to last year’s Terra stablecoin collapse. A New York court ruled Thursday that the SEC can request the South Korean government’s help to both question Shin and obtain documents related to Chai Corporation, a Seoul-based digital payment provider he founded in 2018.

Fast facts

The SEC wants South Korean authorities to help question Seoul-native Shin — whose full name is Shin Hyun-seung — regarding his involvement in the Terra-Luna crypto project and his relationship with its co-founder Do Kwon.
They also want to see documents from the Shin-founded Chai Corporation, which originally shared staff and an office in Seoul with Terraform.
The SEC said the documents will help establish the relationship between Chai and Terraform — including the shared use of Terra’s blockchain and stablecoin, plus Chai’s payment processor. A Chai spokesperson claimed last year that Chai has been operating independently from Terra since the first quarter of 2020.
Shin responded to a request for comment Monday afternoon. He said he had heard nothing from either the U.S. or South Korean authorities.
Terra-Luna, the US$40 billion stablecoin and cryptocurrency project developed by Terraform Labs, collapsed in May last year. Shin, who previously led the growth of local e-commerce company Tmon Inc., set up the company in 2018 with Stanford University computer science graduate Do Kwon.
Shin was publicly indicted in South Korea on April 25. The head of the Seoul Southern District financial crime team said at the time that Shin’s role in the alleged fraud at Terraform Labs was greater than Kwon’s. However, unlike the case against Kwon, prosecutors failed to convince a local court to approve a warrant for his arrest.
Shin has previously rejected all accusations against him, saying that he cut ties with Kwon and Terra long before its collapse.
Shin’s former business partner Kwon, also a Seoul native, fled to Europe after the Terra project imploded and is currently in jail in Montenegro. He received a four month sentence on June 19 for trying to leave the country on a forged passport.
Both the U.S. and South Korea have filed extradition requests for Kwon on charges including fraud and capital markets law violations. Kwon has denied all the charges against him.