SEC to Question Terra Co-Founder Daniel Shin
The U.S. SEC is seeking to question Terraform Labs' co-founder Daniel Shin regarding fraud charges related to Terra stablecoin's collapse.
The U.S. Securities and Exchange Commission (SEC) is turning its attention to Terraform Labs, a Singapore-based blockchain payment platform, and its co-founder Daniel Shin. The SEC is building a case against the firm and its other co-founder, Do Kwon, and has sought South Korea's cooperation to question Shin.
On August 16, District Judge Jed Rakoff granted the SEC's motion to seek assistance from South Korea to question Daniel Shin. The SEC also requested documents from Chai Corporation, a Seoul-based payments provider founded by Shin.
The SEC aims to question Shin on various aspects, including:
- Kwon's role at Chai Corporation
- How Chai used the Terra blockchain
- Chai's disclosures about its relationship with Terraform
- The reason behind the separation of Chai and Terraform
The SEC's questioning is part of its lawsuit accusing Terraform and Kwon of engaging in an illegal scheme that wiped out at least $40 billion in crypto value.
Background of Terraform Labs and the Allegations
Terraform Labs developed the $40 billion stablecoin and cryptocurrency project Terra-Luna, which collapsed in May last year. Shin set up the company in 2018 with Stanford University computer science graduate Do Kwon. Shin was publicly indicted in South Korea on April 25, but prosecutors failed to convince a local court to approve a warrant for his arrest.
The SEC has alleged that Terraform Labs' cryptocurrencies TerraClassicUSD (USTC) and Terra Luna Classic (LUNC) were fraudulent. It also claimed that Kwon and Terraform falsely touted that Chai used the Terra blockchain to process and settle transactions, even faking transactions to give that impression.
Shin has rejected all accusations against him, stating that he cut ties with Kwon and Terra long before its collapse. He also mentioned that he had not heard anything from either the U.S. or South Korean authorities regarding the SEC's request.
The collapse of Terra-Luna had a significant impact on the crypto market, wiping out around $40 billion in value. The legal actions against its co-founders may have ripple effects on other projects and the perception of cryptocurrencies as a whole..