Home of Terraform Labs Co-Founder Raided by Local Authorities

By: Obinna Tony

Home of Terraform Labs Co-Founder Raided by Local Authorities

July 26, 2022 12:24 PM

The authorities continue their investigation into fraud allegations that have marred Terra's collapse. But the home of Terraform Lab’s co-founder Daniel Shin, located in Seoul was raided by South Korean prosecutors on Wednesday. This was timely news reported by their local media.


The raid was said to be done by the investigation of the allegations that fraud was the cause of the terraUSD (UST) algorithmic stablecoin. In May, the terraUSD fell drastically off the U.S dollar peg. This caused a huge fallout in the industry and a lot of hedge funds as well as exchanges were victim to overexposure. Following closely in May, some South Korean-based Luna token investors filed a complaint against Terraform Labs, including its co-founder, Do Kwon for alleged fraud and violations of local securities laws.


Following the report, the raid on Do Kwon’s fellow co-founder’s home was a day when 15 other places, including seven cryptocurrency exchanges were directly targeted by Seoul prosecutors’ Joint Financial Crimes Investigation Team. Following the fall of the UST stablecoin and the LUNA cryptocurrency, authorities that are residing in South Korea are hoping to put in place a tougher regulatory framework for cryptocurrencies to thrive.


Industry players such as cryptocurrency exchanges announced in June that there are plans to create a body that is in place to prevent another crash which is similar to what happened to LUNA. As aptly reported by Chosun Biz, a Korean language reporter, who said the prosecutors’ raids on individuals including companies closely linked to Kwon were because of disgruntled LUNA investors who raised fraud allegations in their lawsuits against the Terra founder.


Authorities are currently probing to know if founder Do Kwon manipulated the price of TerraUSD and whether he is guilty of tax evasion. Shin and Do Kwon created Terraform Labs in 2018, but for a while, Shin has removed himself from Kwon and his associated company. The raid of Shin’s home was preceded by the raid of seven exchanges in South Korea, which are named, Bithumb, Upbit, Coinone, and four associated others which were followed after 81 investors filed complaints in May 2022 days after the crash of Terra algorithmic stablecoin UST.


Shin has stepped down from senior management and focused on Chai, handing the reins of Terraform Labs over to Kwon who had been in charge and also handled the launch of the Terra blockchain. Since the ecosystem imploded, Shin has distanced himself from Kwon and Terraform Labs.