South Korea: Daniel Shin’s Chai Corp. offices raided over alleged links with Terra

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Daniel Shin cannot seem to shake off his ties with Terra after South Korean law enforcement agencies raided the offices of his startup, Chai Corporation.

Prosecutors stormed Chai Corporation, the payments technology company founded by Shin, on the allegations that Shin and his new company misused their customers’ personal information without their consent. Investigators say that the misuse of private data played a crucial role in getting the Chai Terra payment services off the ground, making it a breach of the fiduciary duties owed to clients.

Chai and Terraform Labs have collaborated in the past, particularly in incorporating Terra’s stablecoin in the payments application. Chai responded to the allegations saying that it was not in breach of any rules and had long severed its business relationships with Terra since 2020.

“Chai has been operating independently from Terra since Q1 2020, when our marketing partnership was suspended. Since then, it has an independent team and with independent operating governance,” a company’s spokesperson said.

“Chai and Terra are independent corporations that operate separately, and the Terra issue has nothing to do with the benefits provided by Chai,” the company said in a statement.

The statement noted that Shin was willing to collaborate with prosecutors to clear any doubts over his involvement and to “resolve such speculations.” South Korean parliamentarians invited Shin for a hearing as they sought to get to the bottom of the Terra collapse, but Shin wrote that his appearance would conflict with the investigation by federal prosecutors.

A barrage of law trouble for Shin

Since Terra imploded in May, Shin has had several cases with law enforcement over his involvement in the incident. Things reached a heightened crescendo with a raid in his residence back in July, alongside a similar sortie being conducted against the offices of Korean digital asset exchanges Bithumb and Upbit.

Last week, Shin was slammed with new charges for not disclosing pre-issued Luna tokens in his possessions to investors. The sale of the tokens netted Shin over $106 million, which prosecutors say is a breach of the country’s capital market laws. 

“It’s a problem with pre-mining,” said Hwang Suk-jin, an Information Security professor. “It’s because they did not make proper disclosure in issuing the tokens. Suk-Jin explains that non-disclosure of tokens is bound to lead to losses for unsuspecting investors. 

Terra’s co-founder, Do Kwon, has been on the run since the collapse of the project with local authorities and the Interpol hot on his trail.

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