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  • Writer's pictureJamal Saafir

Terra Co-Founder’s First South Korean Trial After Terra Collapse

Still fresh on the minds of many crypto investors and regulators, is the collapse of crypto project Terra Luna (now LUNC) and its algorithmic “stablecoin” TerraUSD (now USTC), which TerraUSD fell from a $1 pegged valuation to .30 cents and Terra Luna fell from $80 to cents in a matter of days as well.

When the topic of Terra Luna arises, most think of its founder Do Kwon and wonder what legal consequences he must be encountering these days, but many rarely think of Terraform Lab’s co-founder Daniel Shin. Due to alleged violations of South Korean law, including fraud, Shin has now begun his proceedings in the Seoul Southern District Court. According to News1 Korea, Shin is one of seven Terraform Labs employees/accomplices to be tried in connection with Terra's alleged illegal dealings.

As reported by The Block, in April, South Korean prosecutors formally indicted Shin and nine others on multiple charges, including violations of capital markets law.

This came after prosecutors’ months-long investigation into Terraform’s alleged misconduct that offset its collapse last year, decimating more than $40 billion in investor wealth.

On Monday, July 10th, 2023, Shin’s attorneys petitioned for more time to prepare for trial, contending that the case is not a simple criminal trial and calls for more technical support, according to Chosun Biz. The local news outlet also reported that Shin’s attorneys proclaimed, “The case record is vast and there are many technical parts, so an expert review is necessary.” The defense of this case related to the 'Terra Luna collapse incident' requires a lot of specialized knowledge such as IT (information and communication), and the evidence record reaches 48 volumes, so more time is needed to review the list of evidence and write an opinion.

The judge granted the extension and set the second trial preparation date for August 28th, stating, “We will check the opinions of the lawyers and reopen the trial preparation date to decide the opportunity for defense and the order of interrogation.”

As reported by The Block in April, the Seoul Southern District Prosecutors’ Office said Terra’s algorithmic stablecoin was bound to fail and it was “fictitious”.The prosecutors said the project caused “astronomical damage” for investors and took 463 billion won ($355 million) in profit.

Prosecutors also said in April that the authorities had frozen 247 billion won in assets. Shin’s lawyers denied all allegations at the time.

In May, the court rejected the prosecutors’ second pursuit of an arrest warrant for Shin, stating he wasn’t probable to pose a flight risk or destroy evidence.

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