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The United States Securities and Exchange Commission has been granted a motion to seek assistance from South Korea to question Terraform Labs co-founder Daniel Shin \u2014 as it builds its case against the firm and co-founder Do Kwon.\u00a0<\/p>\n
On Aug. 16, District Judge Jed Rakoff granted the SEC\u2019s July 10 motion<\/a> asking if it could seek to question the Terra co-founder, along with requesting documents from the Seoul-based payments provider Chai Corporation he founded. <\/p>\n In its July filing<\/a> the SEC said it wishes to question Shin on Kwon\u2019s role at Chai, how Chai used the Terra blockchain and Chai\u2019s disclosures about its relationship with Terraform.<\/p>\n It also wants to know why Chai separated from Terraform. Chai was founded by Shin and Kwon in mid-2019 and shared offices and staff with Terraform until the two firms split in 2020.<\/p>\n Terraform Labs and Kwon didn\u2019t oppose the SEC\u2019s motion and included their own questions and document requests \u2014 they have previously denied<\/a> the SEC\u2019s allegations.<\/p>\n The SEC sued Terraform and Kwon<\/a> in February alleging its now-collapsed cryptocurrencies TerraClassicUSD (USTC) and Terra Luna Classic (LUNC) \u2014 formerly Terra (LUNA) and TerraUSD (UST) \u2014 were fraudulent.<\/p>\n It also alleged Kwon and Terraform falsely touted that Chai used the Terra blockchain to process and settle transactions.<\/p>\n The SEC claimed Terraform and Kwon faked transactions of its Korean won pegged stablecoin TerraKRW (KRT) to give the impression that Chai was using the blockchain.<\/p>\n Related: <\/em><\/strong>Judge signs order allowing Terraform Labs to subpoena FTX<\/em><\/strong><\/a><\/p>\n Terra\u2019s interconnected crypto ecosystem collapsed in May 2022 wiping out around $40 billion<\/a> in value, bringing the rest of the crypto market with it.<\/p>\n In April, South Korean prosecutors hit Shin with multiple fraud charges<\/a> alleging he hid the risks of investing in Terraform\u2019s cryptocurrencies.<\/p>\n Kwon is currently in Montenegro serving a four-month prison stint<\/a> for trying to leave the country using a fake Costa Rican passport.<\/p>\n Along with the SEC\u2019s suit, Kwon also faces criminal charges in the U.S. and South Korea \u2014 both countries have requested his extradition<\/a>.<\/p>\n