- The preliminary hearing against Terraform Labs co-founder Daniel Shin has commenced in South Korea.
- Shin was indicted and charged with fraud back in April this year
- His legal team have denied the charges and maintain that he is innocent
YEREVAN (CoinChapter.com) — The pre-trial hearing of Daniel Shin, Co-Founder of Terraform Labs, has kicked off in South Korea. According to crypto media, Shin, whose real name is Shin Hyun-Seong, may face trial along with seven other former Terra employees.
The preliminary hearings against the Terra co-founder began in Seoul Southern District Court earlier today. Per a report by Forkast, who got in touch with Shin, the entrepreneur did not attend the court hearing.
Daniel Shin, along with Co-Foudner and CEO Do Kwon and other Terraform Labs executives had come under the scanner on charges of defrauding investors in connection with the $60 billion collapse of the Terra blockchain.
Daniel Shin’s trial begins months after Do Kwon’s arrest
In 2018, Shin and his co-founder Do Kwon, established Terraform Labs. The company introduced the LUNA cryptocurrency in the same year. Subsequently, it connected the token to its algorithmic stablecoin, Terra USD (UST), in 2020. However, as TerraUSD’s peg broke in May 2022, it resulted in the downfall of LUNA as well, leading to the loss of billions of dollars in the process.
Currently, LUNA serves as the native token for the recently launched Terra 2.0 blockchain on May 28, 2022. On the other hand, Terra Classic (LUNC) (previously known as LUNA) represents the rebranded token of the original blockchain, which Do Kwon and Daniel Shin introduced in 2018.
Last month, a Montenegro district court sentenced Kwon to four months imprisonment. The court found Kwon and his colleague, Terraform’s former Chief Financial Officer, Han Chang-joon, guilty of using counterfeit travel documents. The duo allegedly faked their passports.
The Montenegrin police had arrested Do Kwon in March this year.
Daniel Shin maintains innocence in Terraform collapse case
On April 25, 2023, South Korean prosecutors indicted Shin and nine other people involved with Terraform Labs. Some of the charges he faces in the country include fraud and bribery.
As Forkast reported, Seoul prosecutors, have charged Shin with violations of the Capital Markets Act, breach of duty, and embezzlement for his role in the Terra-Luna project. South Korean authorities have alleged that Shin defrauded investors by promoting the Terra stablecoin (UST) as a payment system, despite being aware that offering such services was prohibited.
According to Dan Sung-han, the director of the financial crime team at Seoul Southern District, Daniel Shin played a more significant role in the “financial fraud” compared to Terraform chief Kwon Do-hyeong.
According to the allegations, Shin led the planning and promotion of the Terra stablecoin and the associated crypto business, positioning it as a project suitable for real-world payment usage.
It was Shin that allegedly camouflaged regular fiat currency payments within his payments platform company, Chai Corp., making them appear as if they were processed using Terra cryptocurrency. As a result, he was able to attract approximately 122 billion Korean won ($91 million) in investments into Chai Corp. from venture capitalists.
However, Shin’s legal representatives promptly denied all the allegations made against him. According to them, Shin resigned from Terra and Luna two years before the collapse of the Terra ecosystem. As a result, he has no affiliation with the event.
The team has further argued that Shin willingly returned to Korea to cooperate with the investigation. This, according to them, shows his innocence.