This “illustrates that the prosecutors are trying to stretch Korean laws beyond their breaking point,” said a statement released by Terraform Labs following the dismissal of the arrest warrants by the Seoul Southern District Court.
Included in the list of those sought to be arrested is Daniel Shin, co-founder of the project, who prosecutors say netted profits over $100 million after defrauding investors by failing to disclose certain facts. Three early-stage Terra investors and four engineers behind stablecoin TerraUSD (UST) and LUNA tokens were also targeted in the application for the arrest warrant.
Shin has been the subject of multiple investigations from prosecutors as they try to unearth more facts leading to the project’s collapse in May. The prosecution said that Terra tokens were pre-issued to Shin, which he failed to disclose to investors, and upon selling the tokens, earned $104 million.
Law enforcement seized assets worth $104 million from Shin and carried out raids on his house and the office of his startup, Chai. Shin’s attorneys have continually maintained his innocence while expressing disappointment with the prosecution’s decision for an arrest warrant despite his antecedent of full cooperation with ongoing investigations.
“I left (Terraform Labs) two years before the collapse of Terra and Luna, and have nothing to do with the collapse,” said Shin in a strongly worded statement.
Shin took swipes at the prosecution for bending the law to nail him for the collapse of Terra. The embattled co-founder is hinging his argument on the fact that stablecoins and other digital assets were not mentioned in South Korea’s Capital Markets Act, but prosecutors are viewing Luna as a financial investment security.
Do Kwon ignores the arrest warrant and disappears into thin air
Do Kwon, CEO of Terraform Labs, was the principal suspect on the radar of law enforcement agencies after the collapse. Investigators tried to establish contact with Kwon, but their efforts proved abortive and culminated in the Ministry of Interior invalidating his passport.
The International Criminal Police Organization (INTERPOL) issued a red notice to its member countries to “locate and provisionally arrest” Kwon. Despite the global manhunt for his arrest, Kwon maintains that he is not hiding and remains active on Twitter.
His Twitter places his location in Singapore, but the Singaporean Police Force says Kwon is not in the country, but speculation is rife that the Terra founder may be holed up somewhere in Europe. Kwon faces a mountain of legal issues, including fraud and violation of the Capital Markets Act and a slew of class-action lawsuits from disgruntled investors.
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