South Korean Court Denies Arrest Warrant for Terraform Labs Co-Founder

A South Korean court has denied a request for an arrest warrant for Terraform Labs co-founder, Shin Hyun-Seong, also known as Daniel Shin. This marks the second attempt by South Korean authorities to bring Shin in for questioning, following the recent arrest of Terraform Labs’ other co-founder, Do Kwon.

Kwon was arrested at Podgorica airport in Montenegro on March 23 while attempting to use fake documents to travel abroad. The Seoul Southern District Prosecutors Office took advantage of this situation and requested an arrest warrant for Shin on March 27, citing his involvement in cashing in illicit profits from Terra (LUNA) and TerraUSD (UST) sales.

However, the Seoul Southern District Court denied the request, citing unconfirmed allegations and the unlikelihood of Shin being a flight risk or destroying evidence, according to local media Yonhap.

Shin currently faces multiple fraud charges, specifically in relation to allegedly hiding risks associated with investing in Terraform Labs’ in-house tokens. The denial of the arrest warrant is a setback for South Korean authorities attempting to bring Shin to justice.

Following Kwon’s arrest in Montenegro, authorities from both the United States and South Korea have attempted to extradite the entrepreneur. However, determining to which state he will be extradited is based on several factors, according to Montenegro’s Minister of Justice, Zoran Kovač.

“In the case when we receive several extradition requests, I would like to say that determining to which state they will be extradited is based on several factors like the severity of the committed criminal offense, the location and time when the criminal offense has been committed, the order in which we have received the request for extradition and several other factors,” said Kovač through an interpreter.

Terraform Labs is a blockchain company that has gained popularity for its decentralized stablecoin, UST, which is built on the Terra blockchain. The company has been involved in several high-profile partnerships, including with Binance, OKEx, and Huobi. However, the recent arrests of both of its co-founders have raised concerns about the company’s future and the integrity of its operations.

Terraform Labs has stated that it is cooperating with authorities and is committed to maintaining the highest standards of compliance and transparency. The company has also emphasized that its products and services remain unaffected by the ongoing legal proceedings.

The denial of the arrest warrant for Shin is likely to result in further scrutiny of Terraform Labs’ operations by regulatory authorities in South Korea and other countries. As the blockchain industry continues to grow and mature, incidents of fraud and non-compliance are likely to come under increasing scrutiny, and companies will need to be proactive in demonstrating their commitment to legal and ethical standards.


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FTX Founder’s Lawyers Consider Delaying Criminal Trial

Lawyers representing Sam Bankman-Fried, the founder of FTX, have suggested that they may need to delay his criminal trial due to a lack of evidence from the DOJ. In a letter to United States District Judge Lewis Kaplan, Bankman-Fried’s lawyers stated that they are still waiting for a “substantial portion” of evidence to be turned over to them and that more charges had been laid against the FTX founder in late February.

The criminal trial, which is scheduled to begin on October 2, will focus on fraud charges brought by the DOJ. Bankman-Fried’s lawyers have not formally requested a date change, but they have stated that it may be necessary. According to the letter, prosecutors from the DOJ are holding evidence from devices belonging to Caroline Ellison, the former CEO of FTX’s sister trading firm Alameda Research, and Zixiao “Gary” Wang, an FTX co-founder. Both Ellison and Wang have pleaded guilty to fraud charges and are cooperating with the DOJ.

Bankman-Fried’s lawyers have stated that they are also waiting for contents from “computers belonging to two other former FTX/Alameda employees.” They anticipate that the evidence from these devices “will be voluminous and critically important to the defense.”

The letter also noted that Bankman-Fried was hit with new charges relating to conspiracy and fraud when a superseded indictment was unsealed on February 22. The number of charges against him was bumped up from eight to twelve. Bankman-Fried had previously pleaded not guilty to the original eight charges that were brought against him in December.

The delay in evidence being handed over to Bankman-Fried’s lawyers could have significant implications for the trial. If the defense does not receive the evidence it needs to prepare its case, it may be forced to request a delay. This would mean that the trial would not begin as scheduled on October 2.

The criminal trial against Bankman-Fried has attracted significant attention in the crypto industry. FTX is one of the fastest-growing crypto exchanges in the world, and Bankman-Fried is seen as a leading figure in the industry. The outcome of the trial could have implications for the regulation of the crypto industry, as well as for the future of FTX.


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New York Files Lawsuit Against Coinseed Crypto Platform for Allegedly Defrauding Thousands of Investors

New York State Attorney General Letitia James filed legal action against Coinseed crypto platform for allegedly defrauding thousands of investors, including selling fake cryptocurrencies and charging hidden trading fees.

James’ lawsuit in Manhattan Supreme Court alleged that Coinseed violated the Martin Act – a particular New York anti-fraud law – on several occasions  and stated that the crypto firm “unlawfully sold unregistered securities in the form of a digital token, while making material misrepresentations about their management team.”

The lawsuit mentioned that Coinseed traded cryptocurrencies like Bitcoin without registering its business as a broker-dealer, and sold “CSD” tokens without authorized approval from regulatory authorities to raise funds for its mobile application startup.

Besides filing the lawsuit against Coinseed cryptocurrency company, James also sued two of its executives: Delgerdalai Davaasambuu, Coinseed’s CEO, and Sukhbat Lkhagvadorj, the Chief Financial Officer at Coinseed. While the lawsuit stated that the two directors overstated the company’s management experience, it alleged that Lkhagvadorj “misrepresented himself as a former Wall Street trader, when in truth he had never traded securities or commodities.”

James’ lawsuit further stated that Coinseed scammed investors more than $1 million and is therefore seeking restitution for the victims.

Also, on a separate event in Manhattan federal court, the US Securities and Exchange Commission (SEC) filed suit against Coinseed and Davaasambuu over the illegal digital assets. Both regulators claimed that Coinseed sold the tokens from December 2017 to May 2018.

Crypto Fraud on the Rise

Lawsuits surrounding fraudulent ICOs and fake cryptocurrency investments are not new in the crypto industry. The rising interest in the potential of blockchain has led to several businesses looking for ways to integrate the technology into operational activities including raising capital for firms through a process identified as initial coin offering (ICO). The ICO, which is highly unregulated, comes with some risks and advantages for investors. Anyone could launch an ICO to raise capital with no official registration and due diligence.

US regulators are concerned that the increasing use of cryptocurrencies in the global marketplace appears to entice fraudsters to lure investors into Ponzi schemes and other scams in which such currencies are used to facilitate fraudulent investments or transactions. Such schemes promise investors high investment returns with little or no risk. Investors are therefore encouraged to contact the SEC or securities regulators to report fraud and to get assistance.  

Image source: Shutterstock


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