Former Terra Developer Testifies Against Do Kwon at South Korean Court

Shin has contested the allegations, claiming that regulatory guidelines on cryptocurrency payments were unclear at the time.

Former Terra Developer Testifies Against Do Kwon at South Korean Court
Image / Terraform Labs

In a pivotal development in the ongoing legal battle surrounding the Terra-Luna crypto project, a former developer at Terraform Labs, identified only as Lee, has testified against company co-founders Kwon Do-hyeong and Shin Hyun-seung. According to reports from local media, Lee's testimony alleges that the executives knowingly misled investors regarding the potential use of TerraUSD stablecoin as a payment option, despite being aware of regulatory restrictions.

The testimony emerged during a witness questioning session at the third trial involving eight former members of Terraform Labs, including Shin. Lee's full identity remains undisclosed due to South Korea's privacy regulations, as reported by Chosun.

Prosecutors have leveled accusations against Kwon, Shin, and Terraform Labs, alleging fraud and false promotion of Terra's USD-pegged stablecoin as a viable payment method. The charges stem from the collapse of the Terra-Luna project in 2022, which resulted in significant losses for investors.

Mr. Lee, the development team leader of a Terraform Labs affiliate, took the stand to provide crucial testimony regarding the feasibility of the Terra Project. Lee's revelation that he knew of the legal impossibility surrounding coin payments using Terra sent shockwaves through the courtroom, casting doubt on the project's legitimacy and implicating CEO Shin and other key figures in potential wrongdoing. The testimony, which highlighted the complexity of the project's operating principles, added a new layer of intrigue to the proceedings.

In response to Lee's testimony, Shin Hyun-seong's defense team launched a vigorous defense, challenging the accuracy of the claims and refuting allegations of prior knowledge. With the prosecution alleging a conspiracy to profit unfairly from the Terra Project.

However, Lee's testimony appears to contradict Shin's defense, suggesting that Terra executives, including Kwon, were cognizant of regulatory barriers preventing the use of TerraUSD for payments. In response, Shin's legal team has refuted the claims, alleging falsehood in Lee's testimony.

The unfolding courtroom drama underscores the complexity of the legal proceedings surrounding Terra-Luna's collapse and highlights the ongoing scrutiny faced by cryptocurrency projects amidst regulatory ambiguity. As the trial progresses, observers await further developments and potential ramifications for the cryptocurrency industry.