A former developer at Terraform Labs named Lee testified Monday that Kwon Do-hyeong and Shin Hyun-seung, the company’s co-founders, promoted the TerraUSD stablecoin as a potential payment option to investors, despite knowing local regulations prohibited such an offering, according to local media.
The testimony came during a witness questioning at a third trial for eight former members of Terraform Labs including Shin, local news outlet Chosun Ilbo reported. Former developer Lee’s full name was not disclosed due to South Korea’s privacy rules.
Following the disastrous collapse of the Terra-Luna crypto project in 2022, South Korean prosecutors accused Kwon, Shin and Terraform Labs of defrauding investors by falsely promoting that Terra’s USD-pegged stablecoin could be utilized as a payment measure, among other charges.
Shin, however, argued at the time that regulators did not establish a clear stance on using crypto as a payment method. Shin also claimed to have left Terra two years before the collapse, asserting he had no connection to the debacle.
Lee, the former developer, reportedly testified that Kwon said that South Korean financial regulations prevented TerraUSD from being used as a payment method, indicating that Terra executives were aware of the stablecoin’s limitations. In response, Shin’s defense team counterclaimed that such testimony was false.
Meanwhile, former Terra CFO Han Chang-joon, a key associate of Kwon, was extradited from Montenegro to South Korea on Monday. Han is expected to arrive in Seoul on Tuesday afternoon in Asia and will subsequently face investigation from local prosecutors, according to local news outlet Aju Business Daily.
In March last year, Han and Kwon were arrested at a Montenegrin airport for attempting to travel with forged documents. Kwon remains in custody in Montenegro as local authorities are still deliberating on whether to extradite him to South Korea or the U.S.
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