South Korea Issues Arrest Warrants for 8 People Related to Terraform Labs for Fraud Allegations

South Korean prosecutors have issued arrest warrants for eight Terraform Labs employees for fraud allegations following the massive meltdown of the TerraUSD and its sister token Luna earlier this year.

The collapse erased tens of billions of dollars from the crypto market, prompting South Korean authorities to conduct investigations.

Arrest Warrants

As reported first by Tech Crunch, the Seoul Southern District Prosecutors Office confirmed that eight individuals had been issued with arrest warrants, including its co-founder Daniel Shin, four engineers of TerraUSD and Luna, and three Terraform investors.

The names of the engineers and investors were not disclosed by the prosecutors.

The action was taken two months after the Asian country urged Interpol to put Do Kwon on red notice, the other crypto's co-founder whose whereabouts are still unknown.

An international red notice requests that law enforcement locate and detain a subject pending extradition, surrender, or other legal action.

According to a Korean media report by Yonhap, the authorities believe that Shin made illicit profits of around $105 million (140 billion won) by selling Luna at its height without properly informing investors before the Terra-Luna crash.

Shin is also accused of breaking the Electronic Financial Transactions Act by promoting Luna using customer information from his independent fintech company Chai. As part of the UST-Luna fraud investigation, local officials reportedly conducted a raid on the Chai office this month.

Shin has denied the allegations that he traded Luna at a market high and violated the privacy of her customers. According to local media, Shin's lawyer stated on Wednesday that he departed Terraform two years before the Terra-Luna meltdown and had no connection to its failure.

Court Hearing on Friday

Do Kwon and Shin founded Terraform in Singapore in 2018? Shin quit his position as CEO of Chai earlier this year after leaving Terraform in March 2020 to create the company.

This Friday, December 2, a hearing will be held in court to evaluate if the warrants are lawful, according to the Seoul Southern District Prosecution.

Early in May, Terraform's UST and Luna crashed and burned after the so-called stablecoin lost its peg to the dollar, wiping $40 billion from investors.

Last month, South Korean officials started the procedure to revoke Do Kwon's passport.

Kwon has been given until October 19 to turn in his passport or face having the travel document canceled, according to the South Korean Ministry of Foreign Affairs.