Amid the ongoing manhunt for Terraform Labs co-founder and CEO Do Kwon, South Korean authorities have expanded their investigations to target other Terra executives. Prosecutors have issued an arrest warrant for co-founder Daniel Shin and seven other engineers and investors in the company after suspecting they made illegal profits before the massive collapse of the Terra ecosystem.
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The Seoul Southern District Prosecutor’s Office in South Korea suspected that Shin possessed Terra tokens, which were pre-issued without the public knowledge of investors. In this way, Shin reportedly made a profit of 140 billion won (about $105 million) by selling the pre-issued tokens during the bull market.
Arrest warrants were also sought against three Terraform Labs investors and four engineers responsible for the TerraUSD (UST) and LUNA initiatives, local outlet Yonhap News Agency confirmed. On November 19, South Korean authorities seized Shin’s assets worth more than $104 million on the same suspicion of taking improper benefits.
At the time, Shin’s lawyer upheld the counter-memorial, stating that “reports that CEO Shin Hyun-seong sold LUNA at a high point and made a profit or made a profit through other illegal methods are not true.”
Speaking against the arrest warrant, Shin noted:
“I left (Terraform Labs) two years before the collapse of Terra and Luna, and I had nothing to do with it.”
South Korean regulators aim to toughen penalties for cryptocurrency fraud
The seizure of the funds was intended to minimize investor losses should Shin decide to dispose of the stolen funds. Although Kwon maintains he is not on the run from South Korean authorities, 4,000 members of a group of retail investors are trying to track down the fugitive.
On October 6, the South Korean Ministry of Foreign Affairs ordered Kwon to hand over his passport, which failure to do so would result in the permanent cancellation of that identity document. The deadline has already passed.
Related: Terra Labs and Luna Guard Commission Audit to Defend Against Embezzlement Allegations
A local South Korean report claimed that prosecutors obtained evidence about Kwon’s order to rig the price of Luna Classic (LUNC). However, a spokesperson for Terraform Labs dismissed the allegations, noting their disappointment that “Korean prosecutors continue to try to contort the Capital Markets Law to suit their agenda and push unsubstantiated claims.”