Former Terraform Labs Dev Testifies Against Do Kwon: Report
A former developer at Terraform Labs, known only as Lee, reportedly took the stand on Monday at the 14th Criminal Division of the Seoul Southern District Court, testifying against the companys co-founders, Kwon Do-hyeong and Shin Hyun-seung.
The witness, formerly a leader within the Terra development team, provided crucial testimony against Terra founder Do Kwon and Terraform Labs co-founder Shin Hyun-seung.
Lees Testimony
According to a local media outlet report, Lee testified that in a discussion with Kwon himself, who had acknowledged that South Korean financial regulations prohibited using TerraUSD as a payment method, suggesting Terra executives were aware of the stablecoins regulatory constraints.
Lees testimony also shed light on Terras operational strategy, which sought to establish LUNA as a viable currency via the ChaiPay payment system. This model projected potential profits linked to the anticipated appreciation of the LUNA tokens value.
After the failure of the Terra-Luna crypto project in 2022, South Korean prosecutors accused Kwon, Shin, and Terraform Labs of investor fraud through the misleading promotion of Terras USD-pegged stablecoin as a viable payment option, among other charges.
Shin countered by claiming that regulatory ambiguity surrounded crypto payments and claimed he had severed ties with Terra two years before its collapse.
Defense Challenges Testimony
However, the defense team representing Shin Hyun-seung challenged the accuracy of Lees statements, disputing his claims regarding Kwon and Shins awareness of the impossibility of Terra payments. They emphasized discrepancies between Lees assertions and the presented facts, suggesting a more complex narrative than portrayed.
The prosecutions case is based on the assertion that Shin Hyun-seong and members of the Terra organization collaborated with Kwon and others to realize profits through fraudulent means by falsely promoting the Terra Project from July 2018 to May 2022.
Eight individuals associated with Terra, including Shin, are suspected of violating South Koreas Capital Markets Act. The hearing marked the third trial of Shin Hyun-seong, former CEO of Chai Corporation, who was indicted in connection with the Terra and Luna collapse.
In a related development, former Terra CFO Han Chang-joon, an important associate of Kwon, was extradited from Montenegro to South Korea on Monday. Han is anticipated to undergo investigation by local prosecutors upon his arrival in Seoul on Tuesday afternoon.
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