S. Korea officials seek arrest of Do Kwon’s ex-Terraform Labs colleague Daniel Shin

South Korean cryptocurrency entrepreneur co-founder of Terraform Labs, Do Kwon (centre) is taken to court after being arrested at the airport in Podgorica on March 24, 2023. - AP

SEOUL (Bloomberg): South Korean prosecutors are making a fresh effort at arresting Daniel Shin, a financial technology entrepreneur who helped to set up the Terraform Labs crypto project that suffered a US$60 billion wipeout last year.

The prosecutors’ office in Seoul on Monday (March 27) confirmed the renewed push to detain Shin but didn’t provide further details. The development follows the arrest of Terraform Labs’ other founder Do Kwon in Montenegro last week.

A lawyer for Shin didn’t immediately respond to a request for comment.

South Korea and the US are seeking Kwon’s extradition to face trial on charges related to the implosion of TerraUSD, an algorithmic stablecoin, and its sister token Luna in May 2022. Their collapse sparked a wave of crises in crypto, exacerbating a US$2 trillion rout in digital-asset prices.

Shin’s lawyers previously said that he split from Terraform Labs in 2020 and hasn’t been involved in its operations since. A South Korean court in December rejected an earlier effort by prosecutors to obtain an arrest warrant for him, saying it was difficult to believe he poses a flight risk or would destroy evidence.

Prosecutors in Seoul indicated last year that Shin faced charges including fraud, breach of duty, violation of capital-markets law and illegal fund-raising.

Kwon became a fugitive after Seoul sought his arrest. His whereabouts were a mystery until his detention on Thursday. He was trying to fly to Dubai using false travel documents, according to officials in Montenegro.

Kwon denies allegations that he tried to leave Montenegro using a fake passport, his lawyer said over the weekend. The US has accused Kwon of fraud and South Korean charges include breaches of capital-markets law.

Stablecoins like TerraUSD are meant to hold a constant value, typically $1. The token’s failure was the most spectacular ever seen in the stablecoin segment.

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