More than a year after Terra’s collapse, South Korean authorities have officially launched criminal proceedings against the project’s co-founder Daniel Shin and seven other Terra staff.
The Seoul Southern District Court held the preliminary hearing for Shin and other defendants on July 10, local publication News 1 reported. The embattled Shin did not make an appearance in court but was represented by his legal team as they continued to protest his innocence.
South Korean authorities allege Shin breached the country’s capital markets laws by illegally taking profits and false representation to early investors. The prosecution stated that Shin failed to disclose his pre-issued LUNA tokens to investors, which he later disposed of, netting over $100 million in profits.
Investigators claim that Shin ignored warnings from the Financial Services Commission (FSC) and continued to promote LUNA and stablecoin TerraUSD (UST) as payment mechanisms. The court filing identifies Shin as one of the main culprits behind the de-pegging of UST, noting that his sale of LUNA on the Anchor Protocol triggered the chain of unfortunate events.
During the first hearing, Shin’s legal team asked the court for an extension of time to allow them to prepare for a defense, given the peculiar nature of the case. Shin’s lawyers claim that the prosecution’s evidence was a towering 48 volumes and required blockchain experts.
“The case record is vast and there are many technical parts, so an expert review is necessary,” said Shin’s lawyers.
The court noted that it would study the submissions of Shin’s legal team, but in the absence of any last-minute hiccups, both parties are expected to be in court on August 28 for a second hearing.
South Korea’s prosecutors were expected to begin the case against Shin in May, but concerns over the judge’s fairness clogged the process.
Case building for several months
The prosecution has been building the case against Shin since April 2022, beginning with a raid on his private residence after Terra’s collapse. Authorities upped the ante with another raid on the premises of Chai Corporation, a payments firm run by Shin.
The courts turned down all attempts to secure an arrest warrant because of Shin’s willingness to cooperate with authorities. However, prosecutors took the preemptive step to freeze $100 million worth of assets acquired by Shin pending the resolution of the criminal charges.
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