Terraform Labs Ex-Developer Concedes Terra for Payments Project’s Impossibility and Deceptive Advertisement

Jimmy Aki
Last Updated:

Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.

An ex-Terraform Labs developer testified that the company’s executives knew Terra’s algorithmic stablecoin limits but concealed them from investors.

Payment Structure was “Impossible”

On February 5, South Korea’s 14th Criminal Division of the Seoul Southern District Court Held the first witness examination.

This included Mr. Lee, the team leader of the Terraform Labs development team. He worked with the firm for 14 months (since March 2018) and created the technology of its TerraUSD project.

According to a local media source, Lee confirmed the company offered and promoted TerraUSD despite knowing local regulations shunned the act.

https://twitter.com/LIGHTCRYPT01/status/1754728468951224444?s=20

Notably, the former developer attributed his knowledge to information he received directly from Terraform Labs founder Kwon Do-hyung.

The essence of Lee’s testimony aimed to elucidate the core operational principle of the Terra Project.

At its heart, the project envisioned leveraging Terra, a cryptocurrency pegged to the value of established assets like the dollar, as a functional currency through the innovative Chai Pay payment system.

This mechanism aimed to facilitate seamless transactions akin to traditional fiat currencies.

Moreover, the concept hinged on the notion that the appreciation of Luna Coin, intrinsically linked to Terra, could yield profits for stakeholders.

However, amidst the unfolding legal proceedings, a counter-narrative emerged from the defense representing Shin Hyun-Seong, former CEO of Chai Corporation.

The defense refuted the former developer’s assertions. The legal team particularly contested the claim that Kwon and Shin were cognizant of Terra’s faux payment structure.

The prosecution’s stance, however, remained unwavering. They posited that former Shin and various members of the Terra organization conspired with Kwon to profit illicitly through deception.

So far, allegations of unlawfully promoting the “Terra Project” from July 2018 to May 2022 continue to loom large.

As the case unfolds, it shines a spotlight on broader issues of accountability, transparency, and ethical practices within the cryptocurrency industry.

Terra Ex-CFO Extradited to South Korea Amidst Litigation

On February 5, Montenegro’s justice ministry made a significant announcement regarding the extradition of Han Chang-Joon to South Korea.

Han, who served as the former chief financial officer (CFO) of Terraform Labs, faced extradition following South Korea’s formal request to hand him over to the authorities in his home country.

Han’s legal trouble stemmed from his collaboration with Do Kwon in an incident concerning the use of forged passports, leading to their arrest and a four-month prison sentence handed down by a Montenegrin court.

Under the agreed-upon extradition process, the former CFO is expected to arrive in South Korea on Tuesday at Incheon Airport.

This event marked a significant development in the ongoing legal saga surrounding Terraform Labs and its key personnel.

Han’s extradition served as the latest chapter in the Terra saga, which began in 2018 with Kwon and Shin establishing Terraform Labs.

Over the years, the company and its flagship product, TerraUSD, gained widespread recognition and adoption within the cryptocurrency community.

However, the Terra ecosystem faced a major setback in May 2022 when it depegged from the dollar, triggering a collapse. This event led to a bear crypto market, intensified scrutiny, and legal challenges for its founders and executives.

In September 2022, a South Korean court issued arrest warrants against Kwon and five others, alleging violations of capital markets laws.

In other news, the High Court in Montenegro has prolonged Do Kwon’s detention by an additional two months. The former CEO’s custody term will conclude on February 15, 2024.

Montenegro’s Minister will make the final verdict regarding his extradition for justice.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.