South Korean Prosecutors Raid Terra Co-Founder's Company in UST Probe

Officials said they suspect Chai Corp. leaked customer information to Terraform Labs.

Nov 16, 2022 at 11:58 a.m. UTC

Updated Nov 16, 2022 at 12:25 p.m. UTC

CDCROP: Terra co-founders Daniel Shin and Do Kwon (Terraform Labs) — Terra co-founders Daniel Shin and Do Kwon (Terraform Labs)

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.

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South Korean prosecutors investigating the collapse of the terraUSD (UST) algorithmic stablecoin raided the headquarters of Chai Corp., whose CEO Daniel Shin was a co-founder of Terraform Labs.

The Tuesday raid on the Seoul-based payment services company was conducted by the Seoul Southern District Prosecutor's Office's Financial and Securities Crime Joint Investigation Team.

The value of UST fell to zero after it lost its peg to the dollar, and the subsequent contagion across the crypto industry led to numerous lenders, brokers and exchanges filing for bankruptcy protection. In April a South Korean court issued an arrest warrant for Terra's CEO Do Kwon, whose location is unknown, along with five others. Officials have also raided seven cryptocurrency exchanges in South Korea as part of a fraud probe in connection with the now defunct coins.

"Prosecutors suspect that Chai Corporation leaked customer payment information to Terraform Labs without permission in the process of launching the Terra payment service in 2018," according to a statement sent to CoinDesk.

This isn't the first time Shin has been targeted. Officials raided his home in July as part of the same investigation.

UPDATE (Nov. 16, 12:25 UTC): Adds dropped word in third paragraph.

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