Testimony of Xterra developer, marking a new turning point in the history of provincial law

adminFebruary 7, 2024

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The legal saga surrounding Terraform Labs and its founder, Do-Kwon Kwon, recently took a new development when a former Terra development team leader came forward to testify. These developments, reported by South Korean daily Chosun on February 5, mark a significant turn in the ongoing legal drama.

At the center of this episode is a witness named ‘Mr. Lee’ who testified against Do Kwon and Terraform Labs co-founder Shin Hyun-seung at the 14th Criminal Division of the Seoul Southern District Court. Lee’s involvement adds a new layer to the complex story surrounding Terra’s legal troubles.

During his testimony, Lee provided insight into the legal obstacles Terra faced and attributed his knowledge to his discussions with the governor. He detailed Terra’s operational goals, particularly its plans to establish LUNA as its functional currency through its “ChaiPay” payment system.

This strategy was based on a model that predicted significant profits from the expected increase in the value of LUNA. However, Shin’s lawyers were quick to challenge Lee’s claims, questioning the validity of his claims and the supposed ignorance of Kwon and Shin about the impracticality of Terra’s payment method.

The background to these court cases is the dramatic collapse of TerraUSD and LUNA, both overseen by Terraform Labs. In May 2022, both cryptocurrencies plummeted, losing a massive $45 billion in market capitalization in just one week. The incident reverberated throughout the wider cryptocurrency market, causing hundreds of billions of dollars in losses.

Adding to Terraform Labs’ woes, the company is embroiled in bankruptcy protection proceedings in the United States. This follows a US court ruling that Terraform Labs and Do Kwon violated US law by failing to register two cryptocurrencies (LUNA and MIR) as securities according to SEC classification. Mr. Do-Kwon’s legal troubles are not over yet as he is accused of billions of dollars of fraud in the United States.

Chief Financial Officer (CFO) Han Chang-jun repatriated to Korea

Another twist in the story involves Changjun Han, the former head of finance at Terraform Labs. The return of Mr. Han, who was recently repatriated to Korea, is an important development in this case. He was arrested along with Do-kwon at Podgorica Airport in March 2023, concluding a six-year international search. The announcement by the Montenegrin police follows the decision of the Montenegrin Ministry of Justice. Mr. Han has been indicted in Korea on serious charges including fraud in the financial investment business, and his maximum sentence could be life imprisonment.

Today, the government of Montenegro handed over Han Chang-jun to the competent authorities of his home country in accordance with the decision of the Ministry of Justice at the request of Korea. pic.twitter.com/OvQ1qNyxr1
— Ministry of Justice of Montenegro (@PravdaCG) February 5, 2024

Mr. Han was extradited after being sentenced to four months in prison in Montenegro for attempting to travel with forged documents. The focus now shifts to Dokwon and his lawyer Goran Roddick, who confirms they are awaiting a decision on his extradition. Both South Korean and U.S. authorities have been demanding Kwon’s extradition in connection with the disaster that led to the collapse of the $60 billion Terra algorithm stablecoin in 2022.

Today, the government of Montenegro handed over Han Chang-jun to the competent authorities of his home country in accordance with the decision of the Ministry of Justice at the request of Korea.

In a stark reminder of the international scope of this case, a South Korean court issued arrest warrants for Kwon and others in September 2022 on charges of violating the Korean Capital Markets Act. The international nature of the investigation was further amplified as Interpol’s red notice announcing Mr. Kwon’s arrest followed.

Montenegro’s Ministry of Justice played an important role in the development of this situation, following South Korea’s request to extradite Han Chang-jun. This move highlights important international cooperation to address the damage caused by Terra’s collapse and the resulting legal battle.