Prosecutors in South Korea are now focusing on the other offenders accountable for the crypto outbreak early this year after months of back and forth with Terraform Labs CEO, Do Kwon.
The Seoul Southern District Prosecutors Office has reportedly indicated that it is pursuing an arrest warrant for Daniel Shin Hyun-Seung, another of Terraform Labs’ co-founders, as reported by Yonhap.
The prosecution charges Daniel Shin with illegally profiting from Terraform Labs in the amount of 140 billion won by secretly selling shares in LUNA worth $105 million at the peak of the market. This transaction allegedly occurred before Terra collapsed in May of this year.
According to Yonhap’s report, Shin said that he had assisted in the investigation and that learning of the arrest warrant had surprised him. Shin said in a written statement to the media company that he departed Terraform Labs two years before the demise of Terra and Luna and had nothing to do with the demise.
Due to allegations that Shin promoted Luna using client data and resources from Chai Corp, another one of his businesses, he is also accused of violating the Electronic Financial Transaction Act.
A possible breach of the Capital Markets Act and the Similar Receipt Act Regulation Act is being looked into by the Financial and Securities Crimes Joint Investigation Team of the Seoul Southern District Prosecutor’s Office and Financial Investigation Division 2.
Three of Terraform Labs’ early investors, as well as four engineers who worked on TerraUSD and Luna, have arrest warrants filed by the prosecutor’s office as a result of the inquiry.
Daniel Shin Actively Promotes Terraform Labs
This week, the South Korean news outlet YTN stated that Daniel Shin was the subject of a fraud investigation. The report claims that despite warnings from South Korea’s financial regulators that the cryptocurrency payment industry is unworkable, Shin actively promoted Terra USD and Luna as a form of payment.
Investor hopes skyrocketed because, if they can be used to make payments like cash, cryptocurrencies might be considered a type of “secure asset.” For Shin Hyun-Seong to be utilized as a medium of exchange, it is a very natural truth that the price is steady.
However, as a result of YTN coverage, Shin claimed that cryptocurrency payments had been accepted since the start of the company. It was established that the enterprise was impractical, as the financial authorities had cautioned.
An employee of the Financial Supervisory Service told YTN over the phone that Terraform Labs had inquired about whether to register the virtual asset payment firm as an “electronic financial business” or a “payment business” around 2018.
In response, ‘virtual assets cannot be registered as a payment business in any form.
It was discovered that these alerts persisted throughout 2019 on several occasions. The prosecution learned about the circumstance in which Mr. Shin and CEO Kwon planned to continue advertising that they would soon be accepted as a form of payment by investors.
Nevertheless, Mr. Shin, who recently had three appearances in court and was under investigation, disputed the allegations and said he had no desire to mislead investors. He added, “I just did my best to revolutionize the payment company.”
The prosecution has verified the evidence against the financial authorities, and it will determine sooner or later whether to ask for an arrest order for Shin.