South Korea on Monday held the first preliminary hearing for Terraform Labs co-founder Daniel Shin and seven other former Terra employees, according to the Seoul Southern District Court. Shin was indicted on April 25 on multiple charges related to the collapsed Terra-Luna cryptocurrency project, including fraud. Shin’s lawyers rejected all the charges on the same day as the indictment.

See related article: How did Do Kwon move US$18 mln in stablecoins to ‘unfreezable’ tokens while in Montenegro jail?

Fast facts

  • Shin’s charges include violations of the Capital Markets Act, breach of duty, and embezzlement for his involvement with Terra-Luna, according to Seoul prosecutors. They accuse him of defrauding investors by promoting the Terra stablecoin as a payment system while knowing such services were prohibited.
  • In an email response to Forkast on Monday, Shin said he didn’t attend the court today as it was a preliminary hearing and he had no comment.
  • The US$40 billion Terra-Luna stablecoin and cryptocurrency project of Terraform Labs collapsed in May last year. Shin set up the company in 2018 with Stanford University computer science graduate Kwon Do-heyong. Kwon fled to Europe after the project imploded and is now detained in Montenegro after being sentenced to four months in jail for trying to travel through the country on a forged passport.
  • Both the U.S. and South Korea have filed extradition requests for Kwon, citing similar charges that Shin faces. Kwon has denied all the charges against him.
  • Shin was publicly indicted on April 25, with the director of the Seoul Southern District Prosecutors’ Office financial crime team Dan Sung-han, saying Shin’s role in the alleged fraud is greater than that of Kwon. However, prosecutors failed to convince the local court to approve an arrest warrant for Shin.
  • On the same day as the indictment, Shin’s lawyers rejected all the accusations in an emailed statement, stating that financial authorities did not have an established view on crypto as a payment system at the time of Terra’s launch.

See related article: South Korea indicts Terra co-founder Daniel Shin; Shin rejects accusations