TerraformLabs Co-Founder Daniel Shin Denies Charges in Terra Ecosystem Collapse Trial

The courtroom was packed on October 30, as Daniel Shin, the co-founder of TerraformLabs, appeared before the judge to deny all charges brought against him in connection with the 2022 collapse of the Terra Ecosystem. This high-profile trial has captured the attention of both the cryptocurrency and financial worlds, with observers keen to witness the legal battle unfold.

Shin, who co-founded TerraformLabs alongside Do Kwon, shifted the blame away from himself and towards his former associate, Do Kwon, and his alleged “unreasonable” management practices of Anchor Protocol. Kwon, who is currently incarcerated in Montenegro, has been serving a four-month jail term for traveling with forged documents. Authorities in both South Korea and the United States have filed criminal charges against Kwon for his involvement in the collapse of UST, a cryptocurrency tied to the Terra ecosystem.

Terra-Luna co-founder Shin Hyun-seong | Image via Yonhap News

In an unexpected twist, Shin’s legal team argued that he had terminated his association with Kwon in 2020 for “business purposes.” They maintained that this separation absolved Shin of any responsibility for the subsequent failure of the digital asset’s ecosystem. In a statement to the court, Shin’s lawyer declared, “[Shin] parted ways with CEO Kwon for business purposes in 2020 … The cause of the coin plunge was the unreasonable operation of the Anchor Protocol conducted by CEO Kwon and external attacks. It has nothing to do with CEO Shin.”

Shin’s legal defense laid out their case, attributing the collapse of the Terra ecosystem to Kwon’s management practices and external attacks. They argued that Shin was merely an innocent party who had distanced himself from the critical decisions that led to the crisis.

The charges against Shin include fraud, illegal fundraising, and violating capital market laws. Despite multiple attempts to arrest him, Shin had managed to avoid custody until now. With his appearance in court, he is now officially facing trial for these serious allegations.

Terraform Labs, the company behind the Terra blockchain and the Terra Ecosystem, has consistently maintained that the collapse of their ecosystem was not due to any internal mismanagement but was caused by third-party firms that held “short” positions against their digital assets, particularly LUNA and UST.

The trial is set to continue, and the world watches with bated breath as the legal battle unfolds. With both Shin and Kwon denying any wrongdoing and making conflicting claims, the court will play a crucial role in determining the accountability for the 2022 Terra Ecosystem collapse.

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