One of Terraform Labs’ co-founders – Shin Hyun-seong (better known as Daniel Shin) – reportedly appeared in a South Korean court to be interrogated regarding his potential role in the collapse of the project’s native token – LUNA – and its algorithmic stablecoin – UST – last spring.

The crash prompted investor losses worth approximately $40 billion. The main culprit behind it – Do Kwon – was recently arrested in Montenegro after being on the run for several months.

Kwon’s Right-Hand Man Being Grilled

According to the report, Shin arrived at the Seoul Southern District Court on March 30 to give important information that could shed more light on Terra’s downfall. However, he remained silent when reporters asked him the following questions: “Do you admit to the allegations of solicitation for adopting a Tmon payment method?” and “Is it true that you issued it despite knowing the possibility of Terra and Luna collapsing?”

The Korean authorities previously accused him of conducting numerous offenses, including violation of the Capital Markets Act, the Electronic Financial Transactions Act, the Act on the Aggravated Punishment of Specific Economic Crimes, and more.

The Seoul Southern District Prosecutors Office also suspected Shin of gaining illegal profits before the LUNA/UST failure. Specifically, they claimed he stored LUNA tokens without notifying the relevant watchdogs and later sold them for $106 million. Law enforcement agents confiscated those funds in November last year.

On the other hand, Shin said he cut ties with Terraform Labs in 2020, claiming he had no fault in the multi-billion collapse:

“I left (Terraform Labs) two years before the collapse of Terra and Luna and have nothing to do with the collapse.”

Do Kwon’s Situation

After supposedly hiding in multiple countries for several months, the 31-year-old developer was finally detained in the Balkan nation of Montenegro earlier this month. The arrest occurred at the Podgorica airport, hinting that Kwon might have been preparing to flee to another country. He was carrying falsified Belgian identification and a forged Costa Rican passport.

US prosecutors were quick to blame him for the Terra demise and charged him with securities fraud, commodities fraud, and conspiracy shortly after the detention. 

Montenegrin magistrates required Kwon to remain under custody on local soil for an extended period of 30 days, but his legal defense vowed to appeal the decision. It remains unknown where he will face justice, however, chances are high that he will be deported to either the USA or South Korea.