South Korean prosecutors indicted Terraform Labs co-founder Shin Hyun-seung for fraudulent unfair transactions on Tuesday, in an announcement by Seoul’s Southern District prosecutors’ office.

See related article: From billionaire to Montenegro jail: The rapid rise and fall of Terra chief Do Kwon

Fast facts

• Shin and seven others were prosecuted for fraud, while two other accomplices that earned unfair profits through Terraform Labs were indicted under charges including commercial bribery, according to Dan Sung-han, the director of Seoul Southern District’s joint financial crimes team that spearheaded the investigation on the Terra-Luna collapse.
• “After investigation, it was revealed that Terraform Labs, the platform that ran a blockchain-based stablecoin business, was a fabrication all along,” Dan said.
• Daniel Shin’s part in the “financial fraud” is greater than that of Terraform chief Kwon Do-hyeong, Dan said, as Shin spearheaded the planning and promotion of the Terra stablecoin and the supporting crypto business as a project capable of real-world payment usage.
• Seoul Southern District’s Dan also said that Shin disguised regular fiat currency payments on his digital payments platform, Chai, making it appear as if the transactions were processed using Terra cryptocurrencies, to fabricate the robustness of the project.
• By disguising payments, Shin attracted investments of around 122 billion Korean won (US$91 million) from venture capitalists, Seoul prosecutors said, adding that such a form of obscuring payments was a significant financial crime.
• “The charge that Chai falsely promoted the use of Terra blockchain in its payment system is untrue,” Shin’s legal representatives said in a statement emailed to Forkast. “Chai used the customers’ payment deposits to invest in KRT and provided benefits to customers and affiliates through the resulting profits (seigniorage). Chain stopped the blockchain payment business due to differences of opinion regarding the business direction with Kwon Do-hyung,” the statement said.
• South Korean prosecutors also reiterated that there was ample evidence that Shin and Terraform Labs were fully aware that Terra cryptocurrencies were not deployable as real payment measures. Shin’s legal representatives countered the accusation, saying that even financial authorities did not have a set position on the matter at the time of Terra’s launch.
• The Terra-Luna stablecoin and cryptocurrency project collapsed in May last year, erasing over US$40 billion of its market capitalization in a matter of days. Terraform Labs chief Kwon is currently detained in Montenegro after being arrested March 23 at Montenegro’s Podgorica airport with Terra’s chief financial officer Han Chang-joon, for allegedly attempting to travel with forged travel documents. 
• Kwon is wanted in both South Korea and the U.S. where respective authorities are seeking to extradite the Terraform leader.  
• Seoul Southern District’s director Dan said they are trying their best to bring back Kwon in cooperation with the South Korean justice ministry, adding that South Korean financial authorities are in talks with U.S. authorities over this matter.

See related article: Terraform Labs Kwon to get Montenegro court hearing May 11 on passport forgery charges

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• Source: https://forkast.news/headlines/south-korea-daniel-shin-terraform-do-kwon/