- Chai Corporation, a fintech company for developing infrastructure technologies, was raided by South Korean prosecutors.
- South Korean Seoul Southern District Prosecutor’s office has verified the news with the media.
Chai Corporation was founded by Daniel Shin, who is also a co-founder of Terraform Labs Pte. Ltd. The company, along with its co-founder Shin is accused of using the personal details of its customers without their permission in order to introduce Chai’s Terra payment services.
Three years ago, Chai collaborated with Terraform Labs to add KRT, a stablecoin pegged with Koran won in its payment application. However, after March 2022, the KRT feature was no longer in use. Also, Shin purports that he has no relation either with Terraform Labs or its CEO Do Kwon since 2020.
“Our marketing collaboration with Terraform Labs has been cut since 2020, and since then Chai is running independently. We have an independent team as well as an independent functioning governance” a Chai spokesperson gave information to a reliable media source. He further added that “Shin will cooperate with the proceedings to make the prosecutors clear and sort out the confusion.”
On Monday, the Korean prosecutors revealed that they have called Shin to interrogate him for violating the rules and regulations of the capital markets law for unfair trade practices.
Prosecutors have also highlighted that Shin has kept Luna tokens which had been issued prior without any notification to the regular investors and after that he sold them at a high price. With this event, Shin earned about 140 billion Korean won estimated at about $106 million.
The problem with pre-mining
A professor of information security at Seoul-based Dongguk University said that “The proper revelation in issuing the token is not made in pre-mining which leads to the problems like this. Let’s take an example if investors anticipated that a thousand tokens have been issued but, originally 10,000 have been issued which results in severe loss of investors.”
The investigation has been initiated since May, the time when Terra-LUNA declined. The collapse resulted in hundreds of thousands of losses for many investors all over the world. Prosecutors have produced an arrest warrant and are still tracking Do Kwon as its precise location is still not known.
The arrest warrant was a result of South Korean prosecutors’ judgment to take Luna crypto as an investment agreement security. The charges on Kwon were of breaching the local Capital Markets Act along with acknowledging Terraform Labs an illicit provider of securities.
Source: https://www.thecoinrepublic.com/2022/11/16/daniels-chai-corporation-got-raided-by-south-korean-prosecutors/