On October 30, the trial of Terraform Labs co-founder Shin Hyun-Seong began in a South Korean court. Shin was the CEO of Chai, a payment technology company that partnered with Kwon to create Terraform in 2019.
The context of the trial
According to Chosun Biz, Shin’s lawyer stated: “The reason for Terraform’s bankruptcy collapse was due to the irrational management of the Anchor Protocol. External attacks carried out by Do-hyung Kwon after the split between business partners Shin and Kwon are also to blame.”
The arguments of the prosecution and the defense
The prosecution claims: “They took advantage of the investors’ lack of access to information and their low understanding.”
Furthermore, it argues that “the creation of a business using virtual assets as a means of payment cannot be established.” The defense lawyer refutes this claim, stating that there were no regulations on using virtual assets for payment when Terraform was created.
The prosecutor brought up the SEC case against Ripple, making a comparison between the sale of XRP to investors and Terraform’s actions in South Korea.
Shin’s lawyer argued that US law does not apply in South Korea. The government has announced multiple times since 2017 that virtual assets do not fall under the category of financial products. Moreover, the Capital Markets Act could not be applied retroactively in any case.
Shin facing the trial ordeal
Unlike his 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 significant implications for the virtual asset industry. The defense is attempting to prove that regulations on using virtual assets were nonexistent when Terraform was created. This case could influence how other similar cases are handled in the future.
The ongoing trial and international attention
Shin’s trial is drawing the interest of a global audience, eager to learn the details of this complex case. Onlookers around the world are anxiously waiting to see how the South Korean court will rule on these key issues.
Conclusion
The Terraform Labs case raises many questions. The verdict of Shin’s trial will likely have a significant impact on similar businesses in this emerging field.
