Terraform Labs Co-Founder Daniel Shin Begins Investor Fraud Trial in South Korea
Summary:
The co-founder of payment platform Terraform Labs, Daniel Shin, has begun his trial on charges of investor fraud in South Korea. Prosecutors claim that Shin took advantage of investors' limited access to information, while the defense argues that Shin left the company due to business reasons. The defense also refuted allegations linking the co-founder to the company's financial demise following his departure. Shin is alleged to have violated different laws including the Information Act.
The co-founder of payment platform developer Terraform Labs, Daniel Shin, also known as Shin Hyun-Seong, began his trial along with seven others at the Seoul Southern District Court in South Korea on Oct. 30, as noted in local news bulletins. Allegations against Shin are centered around investor fraud and the question of whether or not Luna is considered a security came up during deliberations.
Shin departed from Terraform Labs in 2020 citing commercial considerations, his legal representative informed the court. Previously, Shin led Chai, a payment tech firm, before partnering with Kwon to establish Terraform in 2019. Shin's lawyer claimed that his departure and the subsequent mismanagement of Anchor Protocol by Do-Hyung Kwon led to Terraform's financial downfall, absolving Shin from blame. The Anchor Protocol was responsible for keeping the dollar-pegged Terra coin stable.
The people in question are facing numerous charges under multiple legislations, including the Information Act. The prosecution argued that the defendants manipulated the difficulty investors had in obtaining information and understanding it. The prosecution also opined that a business cannot be founded using virtual assets as a payment method, a claim that the defense countered, insisting there were no preventative laws on using virtual assets for payments during Terraform's establishment.
Referring to the case filed by the U.S. Securities and Exchange Commission (SEC) against Ripple, the prosecution argued similarities between the sale of XRP to investors and how Terraform operated in South Korea. In response, the defense argued that U.S. laws do not apply in South Korea, pointing out that virtual assets have repeatedly been stated to not qualify as financial products (securities) as per government announcements since 2017.
Terraform and Kwon were sued by the SEC for fraudulent activities in February. Subsequently, South Korean prosecutors called for Shin's presence for an investigation into insider trading, price manipulation, and duty neglect towards Chai customers, accusing Shin of withdrawing above $100m from LUNA unlawfully.
In November 2022, South Korean officials confiscated 140 billion won or around $105 million from Shin, asserting that Shin offloaded Luna coins equivalent to this sum even though he knew their worth would depreciate. The defense denied these accusations as well.
Following Terraform Labs' collapse in May 2022, unlike fellow co-founder Do Kwon, Shin stayed put in South Korea. He first faced the court in November 2022 and was formally charged with fraud in April. There's an active arrest warrant for Kwon, who is now based in Montenegro.
Published At
10/30/2023 7:24:41 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.