Terra co-founder Daniel Shin blames ecosystem failure on Do Kwon’s management News ▸ South Korea ▸ Terra ▸ Legal
Terra co-founder Daniel Shin blames ecosystem failure on Do Kwon’s management
Shin is currently facing trial over his role in the collapse of the Terra ecosystem and its flagship stablecoin.
2 min read
Updated: Oct. 30, 2023 at 7:40 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Daniel Shin, co-founder of TerraformLabs, appeared in court on Oct. 30 and denied all charges against him in connection with the 2022 collapse of the Terra Ecosystem. He instead laid blame on his associate Do Kwon’s “unreasonable” management practices of Anchor Protocol.
Shin distanced himself from the currently incarcerated Kwon, his lawyers claiming that he had terminated their association in 2020. Therefore, they argue, he can not be held liable for the subsequent failure of the digital asset’s ecosystem. Shin’s lawyer told the court:
“[Shin]parted ways with CEO Kwon for business purposes in 2020 … The cause of the coin plunge was the unreasonable operation of the Anchor Protocol conducted by CEO Kwon and external attacks. It has nothing to do with CEO Shin,
After several failed arrest attempts, Shin is now facing trial in Seoul for fraud, illegal fundraising, and violating capital market laws. However, he has denied all charges against him.
His former partner, Do Kwon, is serving a four-month jail term in Montenegro for traveling with forged documents. Authorities in South Korea and the United States have filed criminal charges against Kwon over his role in the collapse of UST.
Terra failure
Anchor Protocol was Terra’s lending borrowing platform. The protocol promised UST holders a 20% annual yield on the stablecoin holdings, leading to its massive growth and adoption.
UST was an innovative algorithmic stablecoin whose market capitalization peaked at more than $40 billion before suddenly crashing last year, resulting in a contagion that affected several crypto firms.
Following UST’s unexpected collapse, Kwon substantially raised Anchor’s protocol’s interest rate from the initially planned 3.6% to well over 20% in a last-minute decision.
On the other hand, Terraform Labs, the creator of the Terra blockchain, has consistently maintained that the failure of its ecosystem was due to third-party firms that held “short” positions against its digital assets, LUNA and UST.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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Terra is a blockchain protocol that uses fiat-pegged stablecoins to power price-stable global payments systems.
TerraClassicUSD
$0.02113
TerraUSD (UST) is a decentralized and algorithmic stablecoin on the Terra blockchain.
Terraform Labs
Terraform Labs is a startup that created Terra, a blockchain protocol and payment platform used for algorithmic stablecoins.
Do Kwon began his professional journey as an engineer, contributing to tech giants Apple and Microsoft.