Prosecutors Indict 10 Including Shin Hyun-sung Without Detention in 'Terra·Luna Incident'

by Hwang Seoyul

Published 25 Apr.2023 14:04(KST)

The prosecution investigating the 'Terra·Luna incident' has indicted 10 individuals, including former Chai Corporation CEO Shin Hyun-sung.

[Image source=Yonhap News]

On the 25th, the Joint Investigation Unit for Financial and Securities Crimes of the Seoul Southern District Prosecutors' Office (Head Dan Sung-han) announced that they have indicted former Terraform Labs founder Shin, along with three founding members and four Terra corporate executives, without detention on charges of fraudulent unfair trading under the Capital Markets Act.

Regarding former TMON CEO Yoo and Mr. A, who received illicit solicitations from former CEO Shin, they were indicted without detention on charges of breach of trust and bribery for mediation under the Act on the Aggravated Punishment of Specific Economic Crimes, respectively.

According to the prosecution, eight individuals including former CEO Shin are accused of falsely promoting the 'Terra project' as successfully progressing and manipulating transactions from July 2018 to May last year, enabling Luna and Terra coins to be traded, thereby obtaining approximately 462.9 billion KRW in illicit profits and habitually defrauding about 379.6 billion KRW (fraudulent unfair trading under the Capital Markets Act and fraud under the Act on the Aggravated Punishment of Specific Economic Crimes).

From April 2019 to May 2020, they are also charged with issuing Luna coins, which are investment contract securities, distributing and selling them to investors without submitting a securities registration statement, thereby soliciting securities and conducting sales activities (violation of the Capital Markets Act's public offering regulations). From March 2021 to May last year, they are accused of receiving deposits of approximately 51.5 billion Terra coins from many people by promising to guarantee principal and pay 19.56% interest when Terra coins were deposited in the Anchor Protocol (violation of the Act on the Regulation of Conducting Fund-Raising Business Without Permission).

Former CEO Shin is also charged with illegally leaking 170 million electronic financial payment records of Chai Pay customers (violation of the Electronic Financial Transactions Act), deceiving investors by portraying the Chai Pay business as a cost-saving payment service based on Terra, and obtaining and habitually defrauding approximately 122.1 billion KRW in illicit profits from investors (fraudulent unfair trading under the Capital Markets Act, fraud under the Act on the Aggravated Punishment of Specific Economic Crimes). Charges of breach of trust and embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes, violation of the Act on Reporting and Using Specified Financial Transaction Information, and mediation of breach of trust and breach of duty were also applied.

Mr. Yoo, charged with breach of trust, is accused of receiving 500,000 Luna coins (approximately 3.8 billion KRW) as a bribe from former CEO Shin in exchange for illicit solicitations such as support for Terra Pay linkage. Mr. A is accused of mediating requests from former CEO Shin to bank vice presidents and others for approval of Chai Corporation's bank firm banking and receiving 210,000 Luna coins (approximately 160 million KRW) as a bribe.

The prosecution stated, "To recover illegal profits from the defendants and support victims' damage recovery, we have requested seizure and preservation orders on the defendants' criminal proceeds, completing seizure and preservation measures amounting to approximately 246.8 billion KRW. We will continue to track and recover their domestic and overseas hidden assets and actively cooperate in civil procedures for the prompt recovery of victims' damages."