In the early hours of Tuesday, April 25th, 2023, Daniel Shin, co-founder of Terraform Labs, was reportedly indicted alongside nine others by South Korean prosecutors for multiple charges. While April 2023 has been an eventful month for the crypto industry, the news about Daniel’s indictment by South Korean prosecutors was met with little to no surprise.

Do Kwon, founder of Terraform Labs and Daniel Shin’s partner, was reportedly arrested last month in Montenegro on charges of capital markets violation and fraud, as reported by Bloomberg.

Since the TerraLuna crash, Do Kwon has been in the limelight of multiple controversies and is currently wanted in the US.

Terraform Labs Co-Founder, Daniel Shin Indicted For Illegal Trading

According to a Bloomberg report update, Daniel Shin, alongside nine individuals linked to Terraform, is currently faced with multiple charges of capital market law violation, illegal trading, and breach of trust.

These charges stem from last year’s May catastrophic collapse of Terra Luna coin and its algorithmic stablecoin, TerraUSD, which led to a major crash in the crypto market.

The Terra Luna collapse and that of its stablecoin, dealt a solid blow to the crypto industry, leaving Terra investors with unimaginable losses and awakening a dawn of strict crypto regulations.

Daniel Shin, along with the nine individuals recently charged with illegal trading, were said to have laundered and embezzled corporate funds in the amounts of 463 billion Won before the Terra Luna collapse.

However, Dan Sung Han, South Korea head prosecutor who leads the financial crime investigation department, said at a press briefing today that the department has been able to freeze 246.8 billion won ($184.7 million) in assets from those indicted. 

Still, on the report, South Korean officials made statements on the TerraLuna project saying that the algorithm which kept TerraUSD at a stable price was impossible to get right. As such, the project was a total fabrication right from the start. 

Prosecutors have made attempts to arrest Terraform Labs in December 2022, but a South Korean court declined an arrest warrant for Terraform Labs’ cofounder, with the reason being that he poses no risk of running or destroying evidence.

Daniel Shin Defence

Kim Ki-Dong, the lawyer of the Terraform Labs co-founder, made a defense in his client’s favor stating that Daniel had left Terra, two years before the Luna crash and as such, has nothing to do with the troubles caused to investors.

He also stated that Daniel Shin had swiftly returned to South Korea voluntarily after the Luna crash incident and has been helpful to the situation by answering numerous probes for over 10 months now in the hopes of assisting with fact-finding.

Do Kwon is currently being held in Montenegro after he was arrested in the country last month.