Terraform labs co-founder Shin Hyun-Seung, aka Daniel Shin, has reportedly been ordered by South Korean prosecutors to attend an investigation this week for unfairly making gains by selling LUNA [now LUNC] tokens.
A prosecutor from the Seoul Southern District Prosecutors’ Office confirmed with crypto media house Forkast that Shin was pinned for “storing LUNA tokens which had been pre-issued without notifying regular investors and then allegedly earning profits over 140 billion Korean won when he sold the tokens at a high point.” The value of the same stood at $105.52 million at press time.
Notably, prosecutors consider this transaction as “fraudulent” and as a “violation” of the local capital markets law.
Earlier, South Korean authorities had also been investigating if Terra ecosystems’ tokens projected characteristics of securities. The Seoul Southern District Prosecutors’ Office was judging the securities properties of LUNA by referring to overseas cases.
Ultimately, they reached a decision and attributed the token to be a financial investment security. As a result, violation of the capital markets law was one reason why an arrest warrant was issued against Terra executive Do Kwon in September.
Read More – Terra: South Korea issues Arrest Warrant Against Do Kwon
Other tangents include breach of duty, insider trading
Shin has time and again attested that he cut ties with Terraform Labs and Do Kwon in 2020. At that time, he moved on to the payment technology company Chai Corporation, where he currently serves as Founder and CEO.
The latest report now highlighted that prosecutors have further accused the ex-Terra executive of “breach of duty, as the customer information and funds of Chai Corporation were allegedly used to promote Terra’s stablecoin and Luna cryptocurrency.”
Alongside, he will also be questioned if he was aware of insider trading and price manipulation allegedly conducted by Terraform Labs to pump the price of LUNA.
A Chai spokesperson clarified via mail to Watcher Guru that the entity has been operating independently from Terra since Q1 2020. The sent statement also added,
“Daniel will fully cooperate with the ongoing investigation to clarify the misunderstandings and to resolve such speculations.“
At press time, Terra Classic [LUNC] was trading at $0.0001667, down by 9% on the daily.
The story has been updated on November 15, 2022 at 12:06 PM UTC to incorporate comments from a Chai spokesperson.