The Terra Project, developed by Daniel Shin and others, has been accused of fraud and inappropriate trading under the Capital Markets Act, as alleged by prosecutors from the Joint Securities and Financial Crimes Investigation Team of the Seoul Southern District Prosecutor’s Office. The prosecutors accuse the managers and employees of Terra of minting Luna tokens, which they claim are “investment contract securities,” between April 2019 and May 2020, and distributing and selling them to investors without filing a stock report.

Specifically, the charges against Daniel Shin include violation of Capital Markets Law such as fraudulent trading, violation of public offering regulations and unlicensed selling, violation of Specific Economic Crimes Act including fraud, breach of trust and embezzlement of public funds as well as violations of the Information Act, Electronic Financial Transactions Act, forging receipts and misconduct and commercial trust violations.

Prosecutors state that from July 2018 up to May 2020, the Luna and Terra coins were sold and traded through public deception and manipulating transactions, pretending to have a successful Terrra project, netting approximately 462.9 billion won in profits and defrauding the investor of 376.9 billion won.

Sn additionally, the Terra project has been accused of committing investment fraud towards its ‘Bottle Project’, which claimed to reduce costs and discounts through blockchain, illicitly profiting about 122.1 billion won from investors.

The aftermath of such fraud was severe, with the Luna collapsing days after the Terra scandal was made public and losing over 50 trillion won in market capitalisation, causing a huge loss to investors all around the world.

Lastly, former CEO Kwon Do-hyeong and Chai Corporation's former CEO Han Chang-joon are on trial in Montenegro, accused of tampering with official documents and forging passports. Kwon is currently still being held in Montenegro pending his trial.

Cryptocurrency brings a lot of potentials and opportunities, however investors should not forget to be careful of fraudulent activities and manipulations by unscrupulous individuals. It is essential to conduct due diligence before investing and always remember to stay aware of any news and suspicious activities.



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