Former Terraform Labs Developer Testifies, Do Kwon Deliberately Misrepresented TerraUSD to Investors
In Brief
Former Terraform Labs developer testified that Do Kwon and Hyun Shin promoted TerraUSD to investors, despite knowing it is locally prohibited.
Former developer at blockchain company Terraform Labs, Lee, whose full name is not disclosed in compliance with South Korea’s privacy regulations, provided testimony stating that Do Kwon and Hyun Shin, the co-founders of the company, actively promoted the TerraUSD stablecoin as a potential payment option to investors.
Despite being aware that South Korean financial regulations explicitly prohibited such offering as a payment method, he suggested that Terraform Labs executives knew the stablecoin’s limitations.
The testimony was presented during a witness questioning session at the third trial involving eight former members of Terraform Labs, including Hyun Shin. In response, Hyun Shin’s defense team counterclaimed the testimony, asserting its falseness.
After the troubled collapse of the Terra and Luna cryptocurrency project in 2022, South Korean prosecutors levelled accusations against Do Kwon, Hyun Shin, and Terraform Labs. The charges included defrauding investors through alleged false promotion of Terra’s stablecoin pegged to US Dollar as a viable payment measure, among other allegations.
At the time, Hyun Shin contended that regulators had not defined a clear stance on using cryptocurrency as a payment method. Additionally, he asserted that he had departed from Terraform Labs two years before the collapse, maintaining that he had no involvement in the subsequent debacle.
Terraform Labs’ Executives Face Complex Challenges Amid Company’s Bankruptcy
Established in 2018 with its headquarters in Singapore, Terraform Labs specialises in blockchain technology. Terraform Labs has created a comprehensive Web3 experience, including a blockchain, wallet, block explorer, RPC solution, a suite of applications, and various developer tools. Despite recently filing for Chapter 11 bankruptcy protection in the United States Federal Bankruptcy Court for the District of Delaware, the company continues to operate and fulfil financial obligations to employees and suppliers.
The Terraform Labs ecosystem encountered a substantial setback in May 2022. After the company’s collapse, co-founders Do Kwon and Hyun Shin faced arrest at a Montenegrin airport as they attempted to depart the country.
Recently, a key associate of Do Kwon, former Terra CFO Han Chang, was extradited from Montenegro to South Korea. Han Chang is anticipated to arrive in Seoul today and will subsequently undergo investigation by local prosecutors. Meanwhile, Do Kwon remains in custody in Montenegro, with local authorities still deliberating whether to extradite him to South Korea or the United States.
The unfolding developments surrounding Terraform Labs, including the recent testimony that offered additional details to its intricate case, emphasize the complex layers of accusations, regulatory challenges, and the company’s resilience within the cryptocurrency sector.
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Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at alisa@mpost.io
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Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at alisa@mpost.io
