The former Chief Financial Officer of Do Kwon’s Terraform Labs Korea, Han Chang-joon, 37, has been officially detained following the issuance of an arrest warrant by the Seoul Southern District Court, as local news agency Newsis reports. The court’s decision, led by Deputy Chief Judge Kim Ji-sook, cited concerns over the potential flight risk Han poses amidst the ongoing investigation into the Terra-Luna cryptocurrency scandal.
Terra CFO Charged In South Korea
Han Chang-joon is closely associated with Do Kwon, the founder of Terraform Labs Korea, and faces serious charges that include violations of the Capital Market Act, the Aggravated Punishment of Specified Economic Crimes Act, and the Electronic Financial Transactions Act. These charges stem from Han’s alleged involvement in a scheme that South Korean prosecutors say deceived investors worldwide by misrepresenting the Terra project’s viability and potential.
According to the prosecutors, Han, in collaboration with Do Kwon and other co-conspirators, is accused of generating at least 53.6 billion won ($40 million) in ill-gotten gains. This was purportedly achieved through the promotion of Terra Coin as a stable-value, market-pegged cryptocurrency, suitable for real-world transactions, despite knowing the inherent risks and the project’s non-viability from the outset.
The prosecution asserts that the project’s blockchain payment services were impracticable under existing financial regulations, yet were falsely marketed to investors as feasible and regulatory-compliant.
Further complicating the legal landscape for Han is the accusation of conducting unauthorized sales of Luna coins without the requisite securities report filings in South Korea, in direct violation of securities regulations. Additionally, Han is charged with the unauthorized disclosure of around 100 million Chai Pay customers’ electronic financial payment information to the Terra blockchain, raising significant concerns about privacy breaches and data security.
The international dimension of this case was highlighted by Han’s arrest in Montenegro in March of the previous year, as he – alongside with Do Kown – attempted to leave the country using forged documentation. His recent extradition to South Korea on these charges underscores the global nature of crypto operations and the international cooperation among law enforcement agencies in addressing alleged financial crimes.
Do Kwon Awaits Extradition
The detention of Han Chang-joon not only emphasizes the ongoing legal scrutiny faced by Terraform Labs and its executives but also serves as a cautionary tale within the broader crypto industry. It underscores the critical importance of regulatory compliance and the potential consequences of misleading investors about the nature and potential of cryptocurrency projects.
As the legal proceedings against Han unfold, attention is also focused on Do Kwon, who remains in custody in South Korea in Montenegro. The decision regarding his extradition to either the United States or South Korea is eagerly awaited.
At press time, LUNC traded at $0.0001078.
Featured image from The Korea Times, chart from TradingView.com