Updated on January 10, 2023 2:14 PM
On suspicion of inflated earnings, South Korean authorities froze almost $104.4 million, or 140 billion won, from co-founder Shin Hyun-seong over six months after the Terra (LUNA) blockchain was formally shut down.
While cryptocurrency exchange FTX's precipitous fall is now the hottest issue in the cryptocurrency market, attention has been diverted from other collapsed ecosystems like Terra. Authorities in South Korea are still working to provide closure for the victims of Terraform Labs, the year's first crypto crash.
Shin is now being investigated by South Korean authorities on two counts: generating unauthorised gains from the issuance of in-house tokens LUNA and TerraUSD (UST) and leaking customer transaction information from Chai, a Korean payment app related to Terra, to Terraform Labs. The suspected co-founder was ordered to appear in court on November 14 as part of an inquiry into the failure of the company by South Korean prosecutors.
According to Shin's lawyer, it is untrue that CEO Shin Hyun-seong sold Luna at a high price and gained gains, or that he made money in other questionable ways.
Secondly, the prosecution charged Terra co-founder Do Kwon with manipulating Terra's pricing in the first week of November.
The Seoul Southern District Court agreed to the prosecutors' plea to freeze Shin's assets, which total more than $104 million. The allegation was Shin's participation in the sale of pre-issued Terra tokens to naïve investors. The district court froze the allegedly stolen monies until additional investigations are carried out on the basis of suspicions of benefitting from unauthorised LUNA sales, according to local media outlet YTN.
You should be aware that the preindictment preservation of the funds is a technique to stop criminals from disposing of stolen money and inflicting further losses or financial harm on the investors.
A representative for Terraform Labs expressed their disappointment in the Korean prosecutors' ongoing attempts to bend the Capital Markets Act to suit their goals and forward unfounded allegations in a written statement. The distinction between cryptocurrency tokens and investment contract securities has been established by earlier legal rulings and remarks by Korean financial authorities, notably the FSC.