South Korea steps closer to arrest of Terraform co-founder Shin

SOUTH Korean prosecutors indicated they are seeking the arrest of Terraform Labs co-founder Daniel Shin, stepping up their investigation of a US$60 billion cryptocurrency wipeout.

The prosecutor’s office said on Wednesday (Nov 30) that reports it’s seeking warrants for Shin and seven others on charges including fraud “aren’t false”. All eight are in South Korea and other allegations include breach of duty, violation of capital-markets law and illegal fund-raising, the office indicated.

Seoul Southern District Court will hold a hearing on Dec 2 to decide whether to issue the warrants, a judge said in a text message.

Shin is now the head of a fintech firm Chai. A spokesperson for Chai couldn’t immediately be reached for comment.

The TerraUSD stablecoin - which was meant to have a stable US$1 value - and its sister token Luna collapsed in May. That wipeout and the recent slide into bankruptcy of Sam Bankman-Fried’s FTX empire rank as among the biggest blowups ever seen in crypto, which is reeling from a prolonged rout.

Fallen crypto entrepreneur Do Kwon is the other founder of the Terra ecosystem. His location became unclear after prosecutors in Seoul sought his arrest. Kwon has denied wrongdoing.

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Shin’s lawyers have previously emphasised that he hasn’t been involved in Terra operations since 2020 when he broke up with the company. They have denied claims that Shin profited from illegal sales of the Luna token to the tune of 140 billion won (S$146 million).

Fintech company Chai said in a statement in May that Kwon and Shin started Terraform Labs together in 2018 and initially evenly split its ownership. Their idea was to use blockchain technology for payment services but later decided to part ways, according to Chai. BLOOMBERG