Shin Hyun-Seong, co-founder of Terraform Labs, and nine other individuals were reportedly indicted by the financial crimes branch of the Seoul Southern District Prosecutor’s Office for the collapse of the Terra stablecoin ecosystem.
After 11 months of investigation, ten individuals were indicted on fraud, violation of trust, and embezzlement charges and sent to trial. KBS World, a Korean newspaper, reported that the prosecutor’s office suspected that the individuals implicated in the collapse amassed illicit profits of approximately $350 million (460 billion won).
Shin is accused of deceiving investors and fraudulently advertising the product to cause substantial losses, despite knowing the project was impossible. Prosecutors have also seized the estimated $180 million (246.8 billion won) worth of the indicted individuals’ assets.
The prosecutor’s indictment arrived just days after a Seoul district court ruled that the Luna (LUNA) token is not a security and is not subject to the Capital Markets Act. The court had previously denied the prosecution’s ten requests to charge Shin with violating the security law.
Shin and nine other executives were indicted just one month after former CEO Do Kwon was arrested in Montenegro. Kwon was indicted in Montenegro on allegations of document forgery. The United States Securities and Exchange Commission also accuses Kwon of multiple counts of securities fraud.
Terra was one of the emerging crypto ecosystems responsible for popularizing the concept of algorithmic stablecoins. In May 2022, however, the native stablecoin, TerraClassicUSD (USTC), decoupled from its dollar value, causing the $40 billion ecosystem to collapse.
