South Korean Court Denies Arrest Warrant for Terraform Labs Co-Founder Daniel Shin

South Korean court has denied the request of the Seoul Southern District Prosecutors Office to issue an arrest warrant for Terraform Labs co-founder Shin Hyun-Seong, also known as Daniel Shin. This move comes after the recent arrest of Do Kwon, another co-founder of Terra.

On March 23, Kwon was arrested at Podgorica airport in Montenegro for attempting to use fake documents to fly abroad. Taking advantage of this situation, the Seoul Southern District Prosecutors Office requested an arrest warrant for Shin on March 27, citing his alleged involvement in cashing in illicit profits from Terra (LUNA) and TerraUSD (UST) sales.

Terra co-founder Daniel Shin

However, the court denied the request while citing unconfirmed allegations and the unlikeliness of Shin being a flight risk or destroying evidence. This is the second time the court has rejected a request for Shin’s arrest, with the first attempt made in November of last year.

Shin is facing multiple charges of fraud, breach of duty, and violations of acts on capital markets, electronic financial transactions, and financial information. Prosecutors suspect that Shin stored Luna, which had been pre-issued without notifying regular investors, and obtained illegal profits worth 140 billion won (US$107.7 million) by selling the tokens at a high point. They also suspect that customer information and funds of fintech firm Chai Corp., which Shin formerly headed, were used to promote Luna.

Shin has denied all charges, stating that he has no connection with Terraform Labs following his departure from the company in March 2020 when he founded Chai.

This situation is yet another example of the ongoing crackdown on cryptocurrency-related fraud in South Korea. While the court has denied the request for Shin’s arrest, the investigation is ongoing, and it remains to be seen what further action will be taken in this case.

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