- SEC charged TerraForm Labs & CEO Do Kwon for fraud in February 2023.
- Links between Chai Corporation & Terra to be investigated by U.S. regulators.
- Relaunched blockchain Terra (LUNA) 2.0 plunged to an all-time low three days ago.
The U.S. Securities and Exchange Commission (SEC) seeks to question Daniel Shin, a co-founder of TerraForm Labs. Previously, SEC Chair Gary Gensler’s team charged TerraForm Labs executives with defrauding customers and allegedly manipulating Terra tokens.
USTC, formerly UST, was shredded to pieces in May 2022, when the smart contract’s vulnerabilities drowned the sister token Terra (LUNA) along the way, which was later rebranded as Terra Luna Classic (LUNC). According to the SEC, Do Kwon unstaked a whopping $3.9 billion in $USTC before the collapse. Do Kwon soon left the blockchain while dealing with tax evasion charges in South Korea.
Double Trouble for Terra Co-Founders
The infamous crypto entrepreneur Do Kwon is currently serving four months in Montenegrin jail for document forgery. Meanwhile, the Securities and Exchange Commission (SEC) formally requests assistance to question Daniel Shin about his Chai Corporation’s alleged ties to TerraForm Labs.
According to the SEC, these two fintech companies had shared access to the stablecoin Terra Luna Classic USD (USTC) and had the same office headquarters in Seoul. Shin is already facing indictment in South Korea since April 25th, 2023.
Shin claims to have cut ties with Do Kwon’s blockchain project long before the Terra Luna Collapse. South Korean prosecutors failed to collect sufficient evidence for the local court to approve an arrest warrant. Finally, a representative of Chai Corporation claimed that the companies split their mutual ventures in the first quarter of 2022.
On the Flipside
- Daniel Shin claimed neither the United States nor South Korean authorities tried to contact him.
Why This Matters
The outcome of this case can bring closure to many investors. Last week, U.S. District Judge Jed Rakoff confirmed that the SEC can gather evidence in cooperation with foreign countries.
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