Terra’s co-founder wants to withdraw from testifying in financial audit following Terra-LUNA collapse

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South Korea’s National Assembly issued a summons to Daniel Shin, co-founder of Terraform Labs Pte. Ltd, urging him to appear before the body to testify in a financial audit. However, Shin has expressed reluctance towards appearing before the legislative house, citing a conflict of interest with local regulators.

Shin is expected to testify before the lawmakers on October 8 in an audit led by the Financial Services Commission (FSC), the country’s top financial regulator. In a letter to the legislators, Shin noted that local law enforcement agencies are currently investigating him over his role in Terra’s ill-fated collapse in May, and his testimony could be tainted.

If Shin is allowed to sit out the parliamentary hearing, Kim Ji-yoon, CEO of DSRV Labs, will be the only witness of the collapse to make an appearance. It seems unlikely that the lawmakers will grant Shin’s wish for a non-appearance, with the members of the Political Affairs Committee expressing disappointment over Shin’s lack of enthusiasm.

Article 12 of the Act on Testimony and Appraisal of the National Assembly stipulates a penalty of a term of imprisonment not more than three years or payment of a fine not less than $7,000 and not more than $22,000 for failing to appear without a justifiable reason.

Pundits have questioned the efficacy of questioning Shin as the co-founder had previously ended business relationships with the embattled Do Kwon as far back as 2020. However, some have speculated that Shin’s new company used customers’ deposits to assist Terra as it tried to stay afloat during its implosion in May.

After the collapse, Shin’s residence was raided by law enforcement agencies as prosecutors tried to find accomplices involved in the network’s failure. Nearly 280,000 individuals in South Korea were affected by the collapse setting the stage for tighter regulatory control over the country’s digital asset ecosystem.

Terra’s founder on the run

Security agencies have launched a large-scale manhunt for Terra’s founder, with South Korean immigration authorities invalidating his passport in an attempt to rope him in. Interpol has issued a Red Notice against Do Kwon, which gives him a wanted status in 195 countries.

However, Do Kwon has argued that he is not on the run, taking to Twitter to claim that he is “making zero effort to hide.” Speculation was rife that the embattled founder was hiding out in Singapore, but the country’s police force has refuted the claims of Do Kwon being within Singaporean borders.

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