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- Former Terraform Labs financial officer, Han Chang-Joon, was deported to South Korea for alleged financial fraud.
- Terraform Labs co-founder, Daniel Shin, faces a similar trial in Seoul while denying all charges.
Montenegro has deported Terraform Labs’ former financial officer, Han Chang-Joon, to South Korea, where he will face criminal proceedings related to financial investment fraud services. Han Chang-Joon, referred to as J.C.H., was handed over to South Korean judicial and police authorities to address the charges against him.
Država Crna Gora je danas postupila po zamolnici Južne Koreje, i po odluci Ministarstva pravde predala Haan Chang Joon-a nadležnim organima njegove matične države. pic.twitter.com/OvQ1qNyxr1
— Ministarstvo pravde Crne Gore (@PravdaCG) February 5, 2024
Han Chang-Joon’s extradition to South Korea marks a pivotal moment in the Terraform Labs saga. This is after serving a four-month prison sentence in Montenegro for attempting to travel using falsified documents. The charges against him are related to financial investment fraud services, and his trial in South Korea will shed more light on the alleged wrongdoing within Terraform Labs.
Han Chang-Joon is not the only key figure facing legal troubles in connection with Terraform Labs. Daniel Shin, one of the company’s co-founders, currently faces a similar trial in Seoul, South Korea. Shin is facing charges that include fraud, illegal fundraising, and violation of capital market laws. However, he vehemently denies any involvement in the collapse of the cryptocurrency company.
The deportation of Han Chang-Joon comes shortly after Terraform Labs filed for bankruptcy protection in the United States. This strategic move aims to safeguard the company’s business interests and facilitate financial restructuring. The filing acts as a preemptive measure to protect against potential enforcement actions by the U.S. Securities and Exchange Commission (SEC) in the wake of Terraform Labs’ financial turmoil. The move underscores the company’s commitment to resolving its legal challenges and ensuring the stability of its operations.
Terra Ecosystem’s Downfall and Legal Consequences
The legal troubles surrounding Terraform Labs stem from the collapse of the Terra ecosystem in May 2022. The platform’s algorithmic stablecoin, TerraUSD (UST), triggered the collapse by losing its dollar peg, resulting in a significant decline in value. This event had a cascading effect on the ecosystem’s LUNA governance token, causing its value to plummet.
The repercussions of Terra’s downfall extended beyond the platform itself, sparking a prolonged bear market and even contributing to the collapse of the crypto exchange FTX.
Han Chang-Joon’s arrest in March 2023 was closely tied to Terraform Labs’ co-founder, Do Kwon. Both individuals were apprehended, and Do Kwon became the subject of a jurisdictional dispute between the United States and South Korea.
Eventually, Montenegro agreed to extradite him to the United States, where he faces eight criminal counts of fraud, among other charges. These charges directly link to the collapse of the Terra ecosystem and its subsequent impact on the cryptocurrency market.
In addition to the criminal charges, Do Kwon faces a civil lawsuit filed by the U.S. Securities and Exchange Commission (SEC). The SEC has accused him of orchestrating a multi-billion dollar crypto asset securities fraud. Do Kwon’s legal battles, much like those of his colleagues, are far from over, and they continue to attract significant attention within the cryptocurrency community.