Daniel Shin, the co-founder of Terraform Labs, has been indicted on allegations of violating capital market legislation and other charges by South Korean authorities, according to a recent Bloomberg report. This comes after the recent arrest of Terraform Labs’ founder Do Kwon last month on suspicion of forgery.
Daniel Shin Indicted for Violating Capital Markets Law
Terraform Labs co-founder Daniel Shin and nine others have been indicted by South Korea on various charges, including the violation of capital markets law, in connection to the failed Terra cryptocurrency project that collapsed last year.
At a news conference, Dan Sung Han, the prosecutor who oversees the financial crime investigation department, revealed that so far, prosecutors had frozen 246.8 billion won ($184.7 million) in assets from the suspects. Eight people, including Shin, have been indicted for illegal trading, while two others have been charged with breach of trust. All of those charged have a direct connection to Terra, including involvement in marketing, systems development, and management.
According to his lawyer, Kim Ki-dong, Shin bears no responsibility for the Terra and Luna collapse, as he had left the company two years prior to the event. Kim added that Shin voluntarily returned to South Korea soon after the collapse and has been cooperating with the authorities for over 10 months to assist with the fact-finding process.
Background of the Terra Labs Collapse
The collapse of Terra occurred last summer when the algorithmic stablecoin, TerraUSD, deviated from its 1:1 peg with the US dollar, resulting in significant disruption throughout the cryptocurrency markets. These events contributed to a broader downturn of $2 trillion in the crypto market.
The incident caused a ripple effect that led to several crypto firms, including Three Arrows Capital, Voyager, and Celsius, going bankrupt. Officials have described the Terra project as a “fabrication” since its inception, citing an algorithm that was impossible to get right in maintaining TerraUSD’s stable price.
It was further alleged that Shin and other charged individuals have caused “astronomical damage” to global investors.