Terra, Daniel Shin, Fraud

Terra co-founder Daniel Shin faces fresh fraud charges

Shin Hyun-seung, who is commonly known as Daniel Shin, Terra’s co-founder could be facing new fraud charges as prosecutors look to take him down with the embattled Do Kwon. Local media firm YTN reports that investigators might be proceeding with fraud charges in relation to Shin’s promotion of the Terra-Luna stablecoin.

Back in 2018, Shin told users that Terra’s stablecoin will be available as a method of payment on e-commerce platforms. However, the Financial Supervisory Service (FSS) told Shin that digital assets could not be used as a payment mechanism under the Electronic Financial Transactions Act.

Despite the warnings, Shin allegedly ignored the FSS and continued telling investors that the stablecoin would make its debut on e-commerce platforms. Investigations revealed that the FSS continued to issue warnings to Shin throughout 2019 amid heavy promotion of the stablecoin.

Choi Sung-kook, an official from the Seoul Southern District Prosecutors’ Office confirmed YTN’s reports, saying that Shin’s actions were in violation of Korean securities laws.

“If you induce investment by providing false information about your business, you may be charged with fraudulent trading under the Capital Markets Act,” said Choi.

TerraUSD (UST) de-pegged from the U.S. dollar and set things in motion for the collapse of the entire Terra ecosystem. Following the implosion, law enforcement agencies have intensified efforts to bring justice to thousands of distraught investors.

An arrest warrant has been issued against Do Kwon in addition to the invalidation of his international passport while several raids have been carried out in the homes and offices of his perceived accomplices.

Multiple meetings with law enforcement agencies

Despite parting ways with Kwon, Shin has been accused of being complicit in Terra’s collapse. The accusations reached their crescendo following a midnight raid by South Korea’s national police in Shin’s home in search of evidence of his involvement.

The offices of his new company were raided by police in early November as prosecutors put together a new case against Shin. One such case is the allegation that Shin made over $100 million in profit for failing to disclose to investors that he was pre-issued a stash of LUNA tokens.

Shin’s lawyers have repeatedly denied involvement in any wrongdoing, saying that the prosecutors are twisting the country’s capital market laws to suit their narratives. “I just did my best to innovate the payment business,” said Shin regarding the barrage from prosecutors.

Shin turned down a parliamentary hearing over his role in Terra’s collapse on grounds that his appearance might conflict with ongoing investigations from law enforcement agencies.

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