Terraform Labs co-founder and seven others were indicted on charges of illegal trading in South Korea on Tuesday, prosecutors said at a press briefing. Two others were charged with breach of trust. All those indicted are linked to Terra. Prosecutors claim the entire Terra project was a “fabrication,” and have frozen W246.8 billion ($184.7m) in assets belonging to the individuals indicted. Shin’s attorneys have said that he parted ways with the business in 2020, one year prior to the catastrophic 2022 meltdown of the Terra system. Shin’s indictment indicates that legal fallout from the Terra disaster continues globally.
The Indictments
Terraform Labs co-founder Sang Shin, also known as Daniel Shin, was among ten people indicted on charges of illegal trading and breach of trust in South Korea on Tuesday, according to prosecutors. Shin and seven others have been charged with illegal trading of the token, with prosecutors saying the entire Terra project was a “fabrication.” Two others were indicted for breach of trust. It’s “possible that prosecutors will also summon Terra Chairman Kwon Soon-won as an unindicted co-conspirator,” Kim Eun-jm, a professor who handles criminal law at Hankuk University, told Bloomberg. Currently based in Singapore, Kwon has repeatedly stated publicly that investors in the project would not lose money—unknown billions appear to have indeed been wiped out through the alleged fabrication.
The Global Legal Response Grows
Legal fallout from the Terra disaster, in which billions of dollars worth of token accounts disappeared and the currency’s value dropped to zero, has spread throughout multiple countries since a Tiburon, Calif., man went to the police there last year after he couldn’t retrieve his 50,000 tokens showing a balance of $2.7 million. The collapse of the crypto market in South Korea saw prosecutors issue arrest warrants for various senior executives, including Terra’s chairman. Terra’s co-founder, Do Kwon, was arrested in Montenegro last month. South Korea and the United States have both requested his extradition. Meanwhile, Kwon has tried to have the charges brought against him by the U.S. Securities and Exchange Commission against dismissed, on the base that tokens associated with Terra are not securities.Some analysts predict that Terra’s notoriety—and negative fallout from an absence of basic corporate governance protections—will lead many existing cryptocurrency projects to adopt the same standards applied to other asset classes. For Terra, the disaster underlined “fundamental issues around transparency and governance” said Cornell Law School visiting professor Emin Gun Sirer.
[h/t Alys Key]