South Korea prosecutes Terraform Labs co-founder Daniel Shin

Alleges large scale fraud, embezzling, and maybe even bribery, before crypto collapse

The Seoul Southern District Prosecutor's Office has announced its intention to go after Terraform Labs co-founder Daniel Shin, and others, for their role in the collapse of the Terra/Luna stablecoin.

A lengthy announcement published on Tuesday details the allegations to be brought against Shin – among them that Shin and his soon-to-be co-defendants knew that their efforts to facilitate payments using a blockchain scheme and a stablecoin pegged to the value of the US dollar just didn't work. The prosecutor's office alleges that Shin and others nonetheless continued to promote their plans, deceiving investors and retail customers alike.

Along the way Terraform Labs operatives also allegedly leaked personal information, embezzled company funds, and others named in the statement perhaps even paid some bribes.

In early 2022 those schemes suffered a rapid unplanned disassembly, causing a $42 billion crater in investors' finances.

US, Singaporean and South Korean authorities have tried to hold Terraform Labs to account ever since, notably by chasing Terraform Labs co-founder Do Kwon around the world as he tried to evade arrest before he was finally collared in Montenegro in March 2023.

Prosecutors said Shin's role in the fraud may have been greater than Do Kwon's.

Shin has reportedly denied culpability, as he left Terraform Labs before the collapse. Shin's lawyers also point out that he's in South Korea to assist inquiries, and other courts have denied previous requests for arrest warrants on grounds that insufficient evidence was produced to justify them.

Your correspondent is no expert in South Korean prosecutorial tactics, but understands this effort was announced at a news conference under the glare of television cameras and featuring a senior prosecutor confidently stating the facts. That's a display that bespeaks confidence in the strength of a case – making such a splash for nought risks humiliation at home and abroad. Some of South Korea's biggest allies and trading partners remain keen to fix the mess Terraform Labs left behind and hold those responsible accountable.

Prosecutors expressed hoped they will be able to recover some assets from the collapsed venture, but offered no timeframe or likely value for the funds that will be recouped. ®