Terraform Labs co-founder Daniel Shin appeared in court Friday, at a hearing to decide whether he should be arrested for allegedly extracting illegal profits prior to the collapse of the Terra ecosystem.

Per the Korea Times, Shin stands accused of selling a $105 million hoard of Terra’s LUNA tokens at the cryptocurrency’s peak price; the tokens had been pre-issued without regular investors being made aware of the fact. The court will decide whether to approve Shin’s arrest either Friday or Saturday, with prosecutors arguing that Terra’s LUNA cryptocurrency constitutes a financial investment security.

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Shin claimed that more than 70% of his LUNA holdings were sold prior to the price surge, and that he still held a significant amount at the time of the cryptocurrency’s crash.

Along with Shin, seven other early investors and Terraform Labs engineers are also named in the warrant. According to local news outlet JTBC, one of those accused worked for Kernel Labs, a firm set up by former Terra developers.

Where is Terra’s Do Kwon?

South Korean authorities issued an arrest warrant for Terraform Labs’ CEO and co-founder Do Kwon in September, with Kwon claiming that he is “not on the run” despite being the subject of an Interpol red notice. In October, his passport was voided by South Korean authorities.

Do Kwon’s legal woes have continued to mount, with a $57 million class-action lawsuit brought against the Terra co-founder in late October.

The Terra ecosystem imploded in May 2022, wiping out some $40 billion of investors’ funds in weeks. The collapse sent shockwaves through the crypto market, with the price of Bitcoin and other cryptocurrencies tumbling, and ultimately leading to the bankruptcies of crypto lenders including Celsius, Voyager and BlockFi, and hedge fund Three Arrows Capital.

Blockchain analytics firms including Nansen and Glassnode have also reported that the collapse of Terra led to the downfall of now-bankrupt crypto exchange FTX, as crypto contagion spread throughout the industry.

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