Former Terraform Labs Leaders And The Court’s Confusing Decision

According to South Korean news agency Yonhap, the Seoul Southern District Court dropped prosecutors’ orders for the arrest of six Terraform Labs executives on December 3.

As Coincu reported, prosecutors just filed the warrants two days earlier. Daniel Shin, the CEO of Chai Corp. and a co-founder of Terraform Labs, was the most high-profile possible arrestee.

Shin is regarded as a pivotal actor in the Terra and Luna meltdown, which rocked the worldwide virtual currency market in May of this year.

With Terraform Labs co-founder Kwon Do-Hyung staying abroad and not returning to Korea, even finding a replacement for former CEO Shin has been tough, implying that the inquiry will be challenging.

After interrogating the suspects (warrant review) before arresting them the day before, Hong Jin-Pyo, chief judge in charge of warrants at the Seoul Southern District Court, dismissed the arrest warrant at around 2:20 a.m. (Korean Time) on the same day. According to Judge Hong:

“Considering the attitude toward the investigation, the circumstances, process, and contents of the statement, it is difficult to see that there is a risk of destroying evidence or escaping beyond the scope of exercising the right to legitimate defense.”

Arrest warrants for three Terraform Labs early investors and four developers, who were all requested jointly, were all denied for the same reason.

The dismissal does not end the criminal case, which is still ongoing, but it does mean that they will not be held in detention throughout the hearings.

Back to Shin’s story, Coincu reported earlier on the court’s decision.

CEO Shin and others are accused of issuing stablecoin TerraUSD and sister coin Luna without notifying investors even though the design itself, in which the price is automatically adjusted according to an algorithm, is flawed (specific economic crime aggravation fraud under the Punishment Act), etc.

Prosecutors believe that despite the internal opinion of Terraform Labs that Terra and Luna were in a structure with a high risk of collapsing together, CEO Kwon and former CEO Shin pushed ahead with the application.

It is difficult to understand after this action of the Southern District Court, on a criminal level, the current evidence is enough to be able to consider arresting Shin and other former directors.

Former CEO Shin is also accused of making unfair profits of 140 billion won by holding Luna issued before starting the business and selling it when the price skyrocketed. Prosecutors also estimated that the other seven people’s illegal gains ranged from a minimum of 1 billion won to a maximum of 80 billion won.

They are also accused of leaking customer information held by Chai Corporation to other companies, such as Terraform Labs (violation of the Electronic Financial Transactions Act).

Representative Kwon, who is staying abroad, is in a state of unknown whereabouts despite Interpol’s red notice and passport invalidation measures.

The prosecution plans to review the reason for the dismissal and decide whether to re-apply for an arrest warrant for former CEO Shin and others.

It is still not clear how the case of these former directors turned out. However, it can be affirmed that investors are still suffering the consequences of the collapse earlier this year, and no individual in this organization has come forward to bear the blame.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

Coincu News