Terraform Labs (TFL) CEO Kwon Do-hyung and TFL’s Signum bank accounts are worth billions of won. In February, the SEC filed a lawsuit against Kwon and TFL, alleging an unregistered securities issue and accused the CEO of moving 10,000 BTC (about 300 billion won) to a Swiss bank, Signum.
Signum, the world’s first virtual asset bank, was founded in 2017 in Zurich, Switzerland. The Financial and Securities Crime Joint Investigation Unit of the Seoul Southern District Prosecutor’s Office (Head Dan Seong-han) acknowledged on April 25 that they are still following Bitcoin owned by Luna Foundation Guard (LFG), with some already converted into cash and stored in the Signum account.
Terraform Labs co-founder Daniel Shin was indicted on Tuesday. The prosecution discovered that the $100 million sent to Signum was used for attorney’s fees. Billions of won are still in the account.
The prosecution also stated that freezing the Signum account would be contingent on the Swiss government and banks deciding which freeze request, from South Korea or the United States, should be processed first.
Shin and seven others were accused of illicit trading, and two more were charged with breach of trust. According to Bloomberg, prosecutors stated at a news conference that everyone involved is tied to Terra.
Terra Co-Founder Daniel Shin’s Assets Frozen Amidst Alleged Financial Wrongdoings
The frozen assets are part of a “restitution” request allowed in court to compensate victims, not a “forfeiture” motion just rejected to deposit the funds in the national treasury.
The accusation comes just one day after the Seoul Southern District Court declared that Terra Classic, as Luna was renamed after its implosion, is not a security under Korea’s Capital Markets Act. Nonetheless, prosecutors have asked the Supreme Court of Korea to rule on the case.
Shin’s attorneys maintained today that he left the Terra project in 2020 and has not been involved in operations since. The prosecutors’ “premise that Shin continued with the business although warnings from financial authorities are incorrect,” according to Shin’s lawyers, according to Korea Daily
Global Legal Implications
Following the arrests of Terraform Labs co-founder Do Kwon and chief financial officer Han Chang Joon in Montenegro last month, the legal fallout from the Terra tragedy now spans multiple countries.
Both the United States and South Korea have requested Kwon’s extradition, but he and Joon must first face charges in the country where they were arrested for using false passports.
Meanwhile, Kwon has requested that the Securities and Exchange Commission (SEC) drop the accusations against him because Terra tokens are not securities.
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