On October 30, the trial of Terraform Labs co-founder Shin Hyun-Seong began in court in South Korea. Shin was the CEO of Chai, a payment technology company that had partnered with Kwon to create Terraform in 2019.

The context of the trial

According to Chosun Biz, Shin's lawyer, "The reason for Terraform's collapse was due to irrational management of the Anchor protocol. The external attacks led by Do-hyung Kwon after the break-up between business partners Shin and Kwon are also to blame.

Prosecution and defense arguments

• The indictment states, "They took advantage of investors' lack of access to information and poor understanding."
• Furthermore, she maintains that "the creation of a business using virtual assets as a means of payment cannot be established". The defense lawyer refutes this assertion. He points out that there were no regulations governing the use of virtual assets for payment when Terraform was founded.

The prosecutor referred to the SEC case against Ripple. The comparison between the sale of XRP to investors and Terraform shares in South Korea was made.

Shin's lawyer argued that US law does not apply in South Korea. The government has repeatedly announced since 2017. This is because virtual assets do not fall into the category of financial products. Furthermore, the Financial Markets Act could not be applied retroactively in all cases.

Shin faces trial

Unlike co-founder Do Kwon, Shin remained in South Korea after the collapse of Terraform Labs in May 2022.

Possible implications for the virtual asset industry

This trial could have far-reaching implications for the virtual asset industry. Indeed, the defense is attempting to prove that regulations on the use of virtual assets were non-existent when Terraform was created. This case could influence the way similar cases are handled in the future.

The ongoing trial and international attention

Shin's trial is attracting the interest of a global audience, eager to learn the details of this complex case. Viewers around the world are eager to see how the South Korean court will decide on these key issues.

Conclusion

The Terraform Labs case raises many questions. The verdict in Shin's trial is likely to have a significant impact on similar companies in this emerging field.