Court Denies Arrest Warrant for Terraform Co-Founder Daniel Shin

The crypto entrepreneur is under investigation for illegal profits made before the coins crashed last year.

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The Prosecutor’s Office sought the pre-trial detention of Shin Hyun-seung, also known as Daniel Shin and a co-founder of the failed blockchain company Terraform Labs, but the Seoul Southern District Court denied the request. The company’s cryptocurrencies, Luna and the stablecoin TerraUSD, are thought to have been significantly impacted by his actions.

The court rejected Shin’s arrest warrant for a second time on Thursday, citing the fact that it is unlikely that he will flee or obliterate evidence, according to a report from the Yonhap news agency. The crypto entrepreneur is being investigated for illegal profits made before the coins crashed last year.

In November, prosecutors sought an arrest warrant for Shin, but the court denied their request.  Following the arrest of Do Kwon (Kwon Do-Hyung), another of Terraform’s founders, last week, they reissued the warrant.

When Kwon tried to board a flight for Dubai, he was stopped in Montenegro.  His extradition is being sought by South Korean authorities, which could take some time. He will first go on trial in the Balkan country for traveling with a fake Costa Rican passport, according to his Montenegrin attorney and the justice minister of the state.

Daniel Shin is accused of several fraud-related offenses as well as breaking regulations pertaining to information, financial transactions, and capital markets in South Korea. He is suspected of storing pre-issued luna, obtaining 140 billion won (almost $108 million) by selling the tokens at a high price point and failing to inform investors about the risk of the two cryptocurrencies collapsing.

Shin is also allegedly responsible for using customer information and funds of a fintech firm he headed, Chai Corp., to promote luna. All of these accusations have been refuted by him, who maintains that he had no affiliation with Terraform Labs at the time of his founding Chai Corporation in March 2020, after leaving the company.

The Seoul court acknowledged that the allegations had been largely proven, but noted that the risk of destroying evidence has been reduced with Kwon’s arrest, according to a report by the KBS, South Korea’s national broadcaster. It also emphasized the importance of enabling Shin to exercise his right to self-defense.

Interior Minister of Montenegro Filip Adi revealed this week that Kwon’s three laptops and five mobile phones, which contained a wealth of “very interesting” information, were discovered by investigators.  Officials revealed that South Korea and the U.S., both of which are requesting Kwon’s extradition, have asked for the devices at a press conference with Montenegrin Justice Minister Marko Kova in Podgorica.

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