Former Terra CFO charged with alleged fraudulent marketing: report

South Korean authorities took former Terraform Labs Chief Financial Officer Han Chang-joon into custody on Thursday for earning 53.6 billion Korean won ($40 million) in unfair profits from the allegedly fraudulent marketing of the Terra stablecoin, according to local news reports.

Han was extradited from Montenegro on Monday after being arrested in March last year for attempting to travel with forged documents, along with Terra co-founder Kwon Do-hyeong, better known as Do Kwon.

Seoul prosecutors now accuse Han of participating in the fraudulent sale of cryptocurrencies while deliberately marketing the false premise that Terra had the potential to be utilized as a real-world payment option, the South Korean news agency Newsis reported.

On Monday, a former Terra developer testified that executive members of Terraform Labs were aware the Terra stablecoin could not be used for payments due to local regulations, during Monday’s trial of former Terra members in Seoul. Terra co-founder Shin Hyun-seung, who was present at the trial, argued that regulators had not established a clear stance on using cryptocurrency as a payment method.

Han’s other charges include selling Luna cryptocurrency without proper securities registration, as the local authorities view the token as investment contracts, and leaking about 100 million financial information records of Chai Pay customers to the Terra blockchain, according to the report. Chai is a payments company created by Terra co-founder Shin Hyun-seung (Daniel Shin) that was closely tied with Terraform Labs. 

Do Kwon awaits extradition decision

Meanwhile, Kwon remains in custody in Montenegro as local authorities are still deliberating on whether to extradite him to the U.S. or South Korea. His detention period is expected to end on Feb. 15.

The Block has reached out to the Seoul Southern District Prosecutor’s Office for further comments but did not immediately hear back.