A South Korean court has again denied an arrest warrant for Daniel Shin, a co-founder of Terraform Labs who is under investigation for fraud. Shin has been accused of illegally profiting from the sale of more than $100 million of the luna cryptocurrency before it crashed.
Seoul court frees Terraform co-founder citing low flight risk
The Seoul Southern District Court has rejected a request by the Prosecutor’s Office for the pretrial detention of Shin Hyun-seung, co-founder of failed blockchain firm Terraform Labs, also known as Daniel Shin. He is believed to have played a key role in the collapse of the company’s cryptocurrencies, luna, and the terrausd stablecoin.
On Thursday, the arrest warrant for Shin was denied for the second time, with the court ruling that evidence is unlikely to be leaked or destroyed, the Yonhap news agency reported. The crypto entrepreneur is under investigation for illegal profits made before the coins crashed last year.
Prosecutors first requested an arrest warrant for Shin in November, and the court rejected their initial request. They resubmitted the warrant after the arrest last week of Do Kwon (Kwon Do-Hyung), another of the founders of Terraform.
Kwon was detained in Montenegro while trying to board a flight to Dubai. South Korean authorities are seeking his extradition, which will likely take time. According to his Montenegrin lawyer and the country’s justice minister, he will first be tried in the Balkan nation for traveling on a false Costa Rican passport.
In South Korea, Daniel Shin faces multiple charges of fraud and violations of laws governing capital markets, financial transactions, and information. He is suspected of storing pre-issued luna, made 140 billion won (nearly $108 million) by selling the tokens at a high price, and failed to inform investors about the risk of the two cryptocurrencies collapsing.
Shin is also allegedly responsible for using customer information and funds from a fintech company he ran, Chai Corp., to promote luna. He has denied all of these charges, insisting that he was not connected to Terraform Labs after leaving the company in March 2020, when he founded Chai Corporation.
According to a report by South Korea’s national broadcaster KBS, the Seoul court acknowledged that the charges had been largely verified, but noted that the risk of evidence destruction has been mitigated by Kwon’s arrest. He also stressed the need to allow Shin to exercise his right to defend himself.
Montenegrin Interior Minister Filip Adžić revealed this week that investigators found three laptops and five mobile phones belonging to Kwon containing a lot of “very interesting” information. During a press conference with Montenegrin Justice Minister Marko Kovač in Podgorica, officials announced that both South Korea and the United States, which is also seeking Kwon’s extradition, have requested the devices.
What do you think of the South Korean court’s decision to deny the arrest warrant against Terraform co-founder Daniel Shin? Share your thoughts on the case in the comments section below.
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