According to local news source Yonhap, the Terraform Labs co-founder Shin Hyun-seung and seven other associates will go on trial for the first time in Seoul Southern District Court on May 26 in fraud charges related to the failure of the Terra-Luna stablecoin and cryptocurrency project, which resulted in a loss of $40 billion in May 2022.
Yonhap reported that the Terra co-founder assembled a team of 30 lawyers for his defense, including eleven lawyers from a law firm that recently hired a former Seoul prosecutor who investigated the Terra-Luna collapse.
On April 25, local prosecutors indicted Shin and nine others for fraud related to the Terra-Luna collapse, although none were arrested. The indictment includes Shin and seven Terraform employees. Two other individuals are facing bribery charges related to the case, but a court date has not been set.
In 2018, Shin Hyun-seung established Terraform Labs with Kwon Do-hyeong, who is currently under arrest in Montenegro, where he was detained last month for allegedly traveling on forged travel documents.
The South Korean e-commerce company Tmon Inc. was founded in 2010 by Shin, a 38-year-old businessman and graduate of the University of Pennsylvania’s Wharton School. By 2021, the business had generated revenues of US$100 million.
The Shin family has connections, including Shin Jik-soo, a former justice minister of Korea, and Hong Seok-Hyun, the chairman of one of the country’s largest media groups, JoongAng Holdings.
On April 25, Dan Sung-han, the director of the Seoul Southern District Prosecutors’ Office financial crime team, stated in a press conference that Shin had a more significant role in the alleged financial fraud than Terraform chief Kwon. However, despite two attempts, prosecutors have been unable to persuade the local court to approve an arrest warrant for Shin.
Prosecutors accuse Shin of promoting the Terra stablecoin as a potential payment measure to defraud investors, knowing such services were prohibited.
Shin’s attorneys denied the allegations in an email to Forkast on April 25 and claimed that financial authorities did not have a firm stance on the topic of cryptocurrency as a potential payment method at the time of Terra’s launch.
Prosecutors accuse Shin of promoting the Terra stablecoin as a potential payment measure to investors while knowing such services were prohibited, thereby defrauding them.
