South Korean authorities have been investigating Terraform Labs’ co-founder, Daniel Shin, following suspicions of involvement in promoting unstable and uncertain investment opportunities with Terra (LUNA) and TerraUSD (UST) tokens.
A previous warrant for Shin’s arrest had been requested by the authorities, along with those for three investors and four engineers, on the grounds that they had committed fraud, breached their duties, violated the legislation governing capital markets, and illegally raised funds.
Daniel Shin has responded to these charges by denying them and stating that he has not been involved in Terra since January 2020, as is demonstrated by his absence from the company’s executive team.
Daniel Shin’s connection to Do Kwon’s arrest
The situation took a new turn with the recent arrest of Terraform Labs’ other co-founder, Do Kwon, in Montenegro, on March 23, 2023. Kwon was caught attempting to board a plane using fake documents.
After Kwon’s arrest, South Korean prosecutors are reportedly making renewed attempts to track down and arrest Shin, suggesting a fresh attempt at his detention. However, no official announcement has been made public in this regard.
The allegations against Shin go back to the time when he was actively involved in Terraform Labs. South Korean authorities have alleged that Shin earned around $105 million in profits from illegal sales of LUNA tokens before Terra’s collapse.
However, Shin has denied any involvement in the illegal activities and has claimed that he has been cooperating with the authorities to clear his name.
The Terra UST de-peg occurred in May 2022, and South Korean authorities issued an arrest warrant in September 2022, accusing Shin and others of violating financial laws.
Interpol issued a “red notice” a week later, calling for global law enforcement to locate and provisionally arrest the perpetrators. Shin, along with the other accused, has denied any wrongdoing.
The collapse of Terra had a significant impact on the crypto market, leading to a loss of billions of dollars for investors.
While the authorities investigate Shin’s alleged involvement in the collapse, he has maintained that he had no involvement in Terra since January 2020. He has also pointed out that Terra was a decentralized organization, and he cannot be held solely responsible for its collapse.
Shin’s legal troubles and the crypto market
The legal troubles for Terra co-founder Daniel Shin continue to mount as South Korean authorities intensify their efforts to arrest him. Shin’s arrest could have a significant impact on the crypto market, as Terra was one of the most popular cryptocurrency projects in South Korea.
Shin’s arrest could also signal a broader crackdown by South Korean authorities on cryptocurrency projects, as they seek to protect investors from fraudulent schemes.
The collapse of Terra and the subsequent investigations highlight the importance of transparency and regulatory compliance in the cryptocurrency market.
While the authorities investigate the allegations against Daniel Shin, it remains to be seen what impact his arrest could have on the crypto market in South Korea and beyond.
