SEC Targets Terra Co-Founder with LUNA, USTC Collapse Lawsuit

The SEC is inquisitive about Chai Corporation’s alleged interconnection with TerraForm Labs.

Do Kwon in the target view, hes putting his hands up in midst of fire. Gary Gensler thinking what to do with him.
Created by Kornelija Poderskytė from DailyCoin
  • 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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This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Tadas Klimasevskis

Tadas Klimaševskis is a Lithuanian journalist at DailyCoin, specializing in covering the lighter side of the crypto industry such as memecoins and pop culture in the metaverse. He has experience as a music artist, English language teacher, and freelance writer, and uses his creative writing skills to summarize valuable information in his work. He is also a strong believer in the potential of blockchain and spends his free time listening to music, traveling, and watching basketball games.