According to YTN, Terra-Luna Co-Founder Daniel Shin will likely face fraud charges in South Korea. The lawsuit contends that the now-defunct TerraLuna stablecoin, UST, was illegally promoted as a payment method in Korea.
The company had been warned by the Financial Supervisory Service that cryptocurrency payments were not accepted in Korea. Nonetheless, the firm continued its campaign, raising investor hopes. Terraform Labs reportedly stated that the token is a secure asset that will soon be used in real life.
Terraform Labs is the blockchain startup behind the Terra-LUNA ecosystem. The company was founded in 2018 by Do Kwon and Daniel Shin.
Terra is an open-source blockchain protocol that allows developers to create algorithmic stablecoins. The company achieved success with its governance token, LUNA, which once ranked sixth on CoinMarketCap.
The Terra ecosystem collapsed in May 2022, with billions of dollars lost. The platform’s stablecoin, UST, lost its 1:1 dollar peg due to massive withdrawals of the token from Anchor, a Terra-based DeFi protocol.
The crash also had a damaging impact on the project’s governance token, LUNA. The failure of the project had a significant impact on various industry stakeholders.
According to Bloomberg, the South Korean government has charged Do Kwon and Daniel Shin with fraud and other financial crimes. Last week, Daniel Shin appeared in court on allegations of raking in over $100 million in profits from pre-issued LUNA tokens. Shin denied the allegations against him, but the court ruled to freeze his assets. The Terraform Labs founder, Do Kwon, has been on the run since the incident in May.
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