According to reports, Shin Hyun-Seong, who is one of the co-founders of Terraform Labs, and nine other individuals have been indicted by the financial crimes unit at the Seoul Southern District Prosecutors’ Office. They are being charged for their involvement in the collapse of the Terra stablecoin ecosystem.
KBS World, a daily newspaper in Korea, has reported that, following an 11-month investigation, 10 individuals have been indicted on fraud, breach of trust, and embezzlement charges. They have been referred to trial for these charges. The prosecutor’s office believes that those involved in the collapse have gained illegal profits of around $350 million (460 billion won).
Shin has been charged with deceiving investors and promoting the product through false advertising, causing significant financial losses even though he knew that the project was not viable. The prosecutor’s office has confiscated the assets of all those accused and has valued them at $180 million (246.8 billion won).
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The prosecutor issued an indictment against Shin just a few days after a court in Seoul ruled that the Luna token is not considered a security and is not subject to the Capital Markets Act. This decision went against the prosecutor’s previous attempts to charge Shin with breaking security laws, as the court denied all ten of their requests.
Shin and nine other executives have been indicted shortly after former Terra CEO, Do Kwon was arrested in Montenegro on charges of document forgery. Kwon is also facing several allegations of security fraud from the United States Securities and Exchange Commission. Terra was a rapidly growing cryptocurrency ecosystem that popularized the use of algorithmic stablecoins.
However, in May 2022, the ecosystem suffered a massive setback when its primary stablecoin, TerraClassicUSD (USTC), lost its peg to the US dollar, leading to the collapse of the $40 billion ecosystem.
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