Terraform Labs co-founders ready for legal battle despite escalating public ire

Do Kwon, co-founder of Terraform Labs, is transferred to a court in Podgorica, Montenegro, May 11. Yonhap

By Lee Min-hyung

Scandal-tainted Terraform Labs’ co-founders ― Kwon Do-hyung, better known as Do Kwon, and Shin Hyun-seong ― are poised to engage in an all-out legal fight against criminal charges regarding the abrupt collapse of the firm’s once-promising Luna coin.

Both men have displayed a strong will to “prove their innocence” with their legal representatives. They have refrained from showing any gestures of remorse for their engagement in the mega-sized crypto scandal which incurred investors’ losses worth 60 trillion won ($44.6 billion) around the world.

The public’s ire is escalating further after Montenegro officially allowed a bail term on Kwon who has been detained in the country on charges of document forgery. Kwon’s lawyer also expressed confidence over his possible acquittal.

Following the latest decision by Montenegro’s court, Kwon will be confined to an apartment there with a condition blocking him from leaving his residential facility amid the ongoing trial.

This has created concerns that Kwon may engage in additional criminal acts by withdrawing or concealing unfair gains he generated over the past few years. There have been signs of cash withdrawals worth $2.4 million and $500,000 on May 6 and May 8, respectively, from crypto wallets assumed to be Kwon’s. Cryptocurrencies worth 65 billion won are known to remain in the two crypto wallets.

There stands a possibility that someone close to Kwon carried out the transfers, as he had been detained during the period. But it appears tough for local authorities to keep track of the suspicious transaction records and whereabouts of the cash.

After Kwon is released on bail, he may devise means of concealing his crypto assets by utilizing Binance ― the world’s largest crypto currency exchange ― or other forms of borrowed-name accounts.

The Korean prosecution is also paying close attention to the case, and plans to ask for judicial assistance with Montenegro over freezing the cash.

Shin, another Terraform Labs co-founder, is also ready for a legal battle by establishing a group of lawyers ― consisting of 31 legal representatives from major law firms or who served as former prosecutors or judges here.

He will have to prove whether he was aware of the systemic defect in the Terra-Luna ecosystem before its collapse in May 2022.

Shin argued that the company worked within the boundaries of the law after reviewing relevant laws with big law firms and financial authorities.

The prosecution stated in its indictment that Shin falsely promoted the Terra project via media interviews and YouTube by concealing the truth over a systemic loophole in the ecosystem.


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