South Korea formally charges Daniel Shin and 9 accomplices over Terra collapse

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After months of investigation, South Korean prosecutors have officially dragged Terraform executives to court on fraud charges that cost investors over $4 billion.

Terraform Labs co-founder Daniel Shin and nine others were indicted in a South Korean court on charges of breaching criminal negligence and violating certain provisions of the country’s capital markets law. Court documents reveal that the 10 individuals netted nearly KRW463 billion ($347 million) in illegal profits, with their actions causing “astronomical damage” to investors.

The indictment is a culmination of an 11-month investigation from prosecutors following the collapse of Terra’s ecosystem. A post-mortem revealed that the ecosystem imploded after its algorithmic stablecoin TerraUSD (UST) de-pegged from the U.S. dollar, wiping billions from thousands of investors.

In the weeks leading to the unsealing of the indictment, authorities disclosed that they had confiscated real estate belonging to Terraform executives worth over $160 million. Prior to the seizure, prosecutors seized $92 million belonging to Shin, an amount investigators say he netted for failing to disclose his holdings of pre-issued tokens to investors.

Shin has continued to protest his innocence in the Terra debacle, with his lawyers arguing that he parted ways with the company in 2020 to float a new startup. Nevertheless, prosecutors say that his new firm still had business dealings with Terraform Labs despite warnings from South Korea’s financial regulators.

Shin will continue his defense in court outside of custody after previous attempts at securing an arrest warrant failed, as the court noted that the former executive was not a flight risk. Given his previous cooperation with law enforcement agencies, the court ruled that Shin is unlikely to tamper with evidence linked to the case.

Grappling with risks of criminal liability, Terra’s former executives are also facing a flurry of class-action suits from disgruntled investors.

Terra’s founder faces the law in the Balkans

Kingpin Do Kwon is going through a rough patch since his arrest in Montenegro while attempting to jet out of the country in a private jet. Montenegrin authorities officially charged Kwon with falsifying travel documents, and will face the full weight of the law before his eventual extradition.

Both South Korea and the U.S. have formally applied for Kwon’s extradition, but Montenegro’s justice minister disclosed that the region will consider the weight of Kwon’s crime and the time of application. South Korean prosecutors had previously traveled to Serbia to open extradition talks while the U.S. has launched a full-scale investigation into Terra’s collapse.

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