South Korean prosecutors indict Terraform Labs co-founder for fraud

South Korean prosecutors on Tuesday indicted the co-founder of Terraform Labs on multiple charges including fraud over his company’s dramatic implosion last year, which wiped out about $40 billion of investors’ money and shook crypto markets.
Daniel Shin – business partner of disgraced South Korean entrepreneur Do Kwon who was arrested in Montenegro last month and is wanted by Washington and Seoul – was indicted alongside seven alleged accomplices who worked at Terraform Labs.
For the latest headlines, follow our Google News channel online or via the app.
They are charged with “violating capital market laws” over their promotion of the Luna and Terra cryptocurrencies, Seoul Southern District Prosecutors’ Office said in a statement.
Their entire project was “only a fantasy with no chance of realization from the beginning,” the office said.
Shin and the other accused knew their Terra project had no chance of delivering on promises they made investors, the prosecutors said.
But they “duped [investors] all around the world through consistent trade manipulation and false advertising, resulting in astronomical financial damage,” the statement added.
The prosecutors also indicted two other people who were not Terraform Labs employees but who are accused of helping the eight suspects and accepting illegal profits in return.
South Korean authorities have already frozen 246.8 billion won ($184 million) from the suspects and have vowed to track down any further illegal profits hidden either in or outside of South Korea.

Seoul is seeking the extradition of Kwon, who is being held in Montenegro after being arrested for using fake travel documents following months on the run.
Shortly after his arrest, the United States charged him with eight counts, including securities fraud and wire fraud, following a lawsuit filed by the US Securities and Exchange Commission.
But South Korean prosecutors made clear they want Kwon, who founded Terraform Labs with Shin in 2018, brought to justice on home soil.
“To get to the bottom of the Terra project fraud and hold those responsible accountable, we will do our best in extraditing Kwon back to Korea,” the prosecutors said in the Tuesday statement.
Many retail investors lost their life savings when Kwon’s Luna and Terra entered a death spiral in May last year.
TerraUSD was marketed as a “stablecoin,” a type of cryptocurrency which is typically pegged to stable assets such as the US dollar to prevent drastic price fluctuations.
But TerraUSD was an “algorithmic stablecoin” – not backed by assets but instead pegged only to its floating sister currency, Luna.
Experts had long warned Kwon’s model was fundamentally flawed, with some outright calling it a Ponzi scheme.
Cryptocurrencies have come under increasing scrutiny from regulators across the globe following a string of recent controversies, including the high-profile collapse of the exchange FTX.
Read more:
South Korea asks Interpol to issue red notice for Terra crypto founder
Developer of failed cryptocurrency Luna issued arrest warrant from South Korean court
Crypto market drops below $1 trln, Bitcoin down 6 pct this week nearing 2022 low