- According to a Monday JTBC report, Terraform Labs employees have been banned from leaving South Korea while the investigation of Terra’s blowup is still ongoing.
- One former Terra developer confirmed the reports on Twitter today, stating that the prosecution didn’t notify any employees of the ban to stop them from potentially destroying evidence or fleeing the country.
- Outside Korea, the U.S. Securities and Exchange Commission is probing Terraform Labs and its founders on suspicion of illegally selling unregistered securities to U.S. customers.
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South Korean prosecutors investigating Terraform Labs and its co-founders Daniel Shin and Do Kwon over Terra’s collapse have reportedly imposed a departure ban on current and former employees.
Prosecutors Impose Departure Ban on Terraform Labs Staff
South Korean prosecutors have reportedly banned Terraform Labs employees from leaving the country.
According to a Monday report by local news outlet JTBC, the Seoul Southern District’s joint financial and securities crime investigation unit has blocked certain key Terraform Labs employees from leaving Korea. The unit, in charge of investigating Terra’s $40 billion blowup that unraveled over the second week of May, reportedly imposed the departure ban without notifying the affected employees to stop them from abruptly fleeing the country amid the ongoing investigation or potentially destroying evidence.
— Daniel Hong 🪄 (@unifiedh) June 20, 2022
Daniel Hong, a former Terraform Labs developer, independently confirmed the JTBC report on Twitter today, saying that he could not leave the country because “the Korean government imposed an exit ban for all [email protected]_money employees today.” He said that the prosecutors had not notified him of the departure ban and later explained that they rarely notify those under investigation of travel bans to stop them from destroying evidence or leaving the country beforehand.
Last month, JTBC reported that the Korean authorities had summoned all Terraform Labs employees for questioning. However, according to the vocal crypto sleuth going under FatManTerra, who claims to have direct links with the prosecutors, the authorities had difficulties contacting the employees. Responding to Hong’s comments on Twitter today, he wrote:
“They subpoenad you [Hong] and all Terra employees. This has been all over the news. Korean prosecutors and our investigation teams have been trying to contact all of you, but almost everyone is ghosting. What do you expect? Reap what you sow”
Hong denied FatManTerra’s claims, answering that the Korean prosecutors did not contact him and that he had reached out multiple times but had been consistently ignored. According to multiple media reports, the special investigations unit is investigating Terraform Labs and its co-founders Do Kwon and Daniel Shin on several allegations, including tax evasion, money laundering, fraud, and running a Ponzi scheme.
The U.S. Securities and Exchange Commission is also probing the company and its founders on suspicion of illegally selling unregistered securities to U.S. customers through Mirror Protocol, a synthetic assets platform run by Terraform Labs. On Jun. 9, Kwon and his company lost an appeal before the U.S. Court of Appeals challenging the SEC’s subpoena requests. Terraform Labs is now obliged to provide the securities regulator with all requested documents and testimony.
Neither Daniel Hong nor Terraform Labs had responded to Crypto Briefing‘s request for comment by press time.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
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