The investigation around Terra, whose crash affected an estimated 280,000 people in South Korea, has turned into a turbid show involving unsubstantiated reports and contradictory statements from parties on either end. South Korean authorities are still trying to determine if there was foul play in Terra’s collapse, which wiped away $40 BN worth of investors’ money.
Who is lying and who is not?
Daniel Shin, who had heavy involvement with Terra in the early days, was set to be queried in that line following his summoning to testify before the National Assembly at the parliamentary audit of the Financial Services Commission (FSC).
Local news outlets reported on Oct 5 that Shin submitted a statement explaining that he couldn’t appear before the body. Shin, who had a business relationship with Terra creator Do Kwon before moving to the Chai Corporation, cited a conflict of interest in the matter. Specifically, his legal representative argued that an appearance could taint his testimony and interfere with an ongoing probe by local law enforcement agencies.
Shin, whose house was previously raided by officials from the prosecutor’s office, is alleged to have used his FinTech business and payment services company to help Terraform with some of its customers’ funds. His summoning, however, seems like a bit of a stretch, given that he cut ties with Do Kwon and Terraform Labs in 2020. The same has been confirmed in the past by a spokesperson from Shin’s firm Chai. The disassociation potentially paints the Chai boss as entirely distinct from Terra’s activities, but authorities might not perceive it so.
First arrest in relation to the Terra crash
In other news, local outlet JTBC reported yesterday that prosecutors made an arrest related to the Terra case on Oct 5. The news post detailed that the chairman of the Financial and Securities Crime Unit asked for Yoo Moo, Terraform Lab’s head of general business operations, to be apprehended. Moo is accused of deploying bots to manipulate markets.
Even more puzzling in the ongoing Terra confusion is reports from South Korea revealing that Kwon attempted to move about 3,313 Bitcoin just a day after a warrant of arrest was issued against him. The authorities are said to have asked crypto exchanges OKX and KuCoin, with only the latter complying with the request to freeze 1,354 BTC. The Terra co-founder is accused of creating a new Bitcoin wallet under the Luna Foundation Guard name, from which he sourced the Bitcoin he sent to the exchanges. Terraform Labs previously claimed all Bitcoin reserves got used up, attempting to keep a breaking-down UST afloat.
Cash-out attempts
Responding to the allegations of attempted ‘cash-outs,’ Kwon slammed media outlets for propagating misinformation about him. He denied interactions with either of the exchanges in the past year and denied that funds owned by LFG or any other entity had been frozen. In another of his previous comments, Do Kwon insisted that he was making no effort to hide from the authorities looking for him.
The Terra founder has a pending arrest warrant, and he’s also been put on red alert by Interpol, which suggests the contrary to what he’s saying. Yesterday, local outlet News1 reported that prosecutors had managed to freeze crypto assets worth $39.6 million (56.2 billion won) belonging to the Terra chief. Kwon dismissed these claims adding a political take to his remarks.
“Hope they don’t use it on attempting to prosecute the opposition candidate for the presidential election, or to put half the country’s living former presidents in jail. It’s no surprise that crypto is most popular in countries that weaponize state institutions against their own people for political gain. Reap what you sow – revolutions start from within.” he wrote.
The latest developments around Terra have increased the likelihood of the potential outcome where the Terra creator faces prosecution over the ecosystem’s crash in May. South Korean prosecutors allege that Kwon and five others violated the domestic capital-markets law
Kwon reportedly ordered to surrender his South Korean passport or face consequences
Last week, Interpol issued a Red Notice making Kwon – initially believed to reside in Singapore – a fugitive. Kwon has repeatedly denied these and other accusations of being on the run, but he hasn’t divulged his current location on all these occasions. Yesterday, the South Korean Ministry of Foreign Affairs threatened to revoke his passport if he doesn’t submit them within two weeks.
Not only does Kwon risk getting his passport canceled for failing to comply, but he could also be denied reissuance until Sept 2023. Other reports from South Korea claim that the order to return passport was issued to five other individuals, presumably the Terra executives whose arrest warrants were issued last month.
Terraform Labs terms it all a highly politicized case
The Wall Street Journal revealed last Thursday that Terraform Labs had drawn an issue with South Korean prosecutors for overreaching their mandate on the Terra issue. The firm believes the matter has been highly politicized, adding that their conduct hasn’t been consistent with the Korean law’s guarantee for fundamental rights.
The firm’s spokesperson claimed that the prosecution team has bowed to pressure from market participants that suffered losses. The firm holds that prosecutors only recently started seeing LUNA Classic as a security, though the token was never in that asset class in the first place. The latter clause implies, therefore, that the token does not subscribe to capital-market laws.
Terra Classic (LUNC) and Terra (LUNA) price action
These latest developments have stymied any upward action for the price of Terra tokens. Market data shows Terra (LUNA) is trading at $2.48, roughly 2.10% down on the day. The dip follows Monday’s retracement from a local high of around $2.70. Terra Classic (LUNC) is also trading in the red, albeit only registering minor losses. Last week’s hype around Binance’s burn saw it climb above $0.00030 and clear $0.00036. The LUNC/USD pair has since slid to $0.00028, where it was observed trading at writing.
The post South Korean Foreign Ministry Targets Do Kwon’s Passport, Kwon’s Associate Daniel Shin Defies Summon by National Assembly appeared first on Securities.io.
