The Seoul Central District Prosecutors’ Office announced on Thursday that it has indicted Shin Hyun-Seung the former chief financial officer of Terraform Labs, a blockchain company behind the Terra stablecoin project, on charges of violating the Act on the Regulation of Conducting Fund-Raising Business Without Permission.
According to the prosecution, Han is accused of conducting a fraudulent marketing campaign for Terraform Labs’ initial coin offering (ICO) in 2018, which raised about 32 billion won ($27 million) from more than 15,000 investors. The prosecution claims that Lee misled investors by exaggerating the potential and profitability of the Terra project, as well as concealing the risks and uncertainties involved.
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.
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The prosecution also alleges that Han used a fake identity and a foreign bank account to evade the authorities and avoid legal responsibility. Han left Terraform Labs in 2019 and has been on the run since then. He was arrested in January this year after being extradited from Montenegro.
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’s indictment is the first case of a criminal prosecution against a major player in the Korean crypto industry, which has been under intense scrutiny and regulation by the government. The prosecution said that it will continue to crack down on illegal and fraudulent activities related to cryptocurrencies and ICOs, which pose a threat to the financial system and harm the public interest.
Do Kwon awaits extradition decision.
Do Kwon, the co-founder and CEO of Terraform Labs, is currently in custody in Singapore as he awaits a decision on his extradition to the United States. Kwon is facing charges of securities fraud, wire fraud, and money laundering for his role in the alleged $150 million Terra stablecoin scheme.
According to the indictment, Kwon and his co-conspirators deceived investors and regulators by falsely claiming that Terra tokens were fully backed by fiat reserves and audited by reputable firms. In reality, the defendants allegedly used a portion of the funds raised from the initial coin offering (ICO) to manipulate the price of Terra tokens and enrich themselves.
The U.S. Department of Justice (DOJ) announced the arrest of Kwon on January 25, 2024, after a joint investigation by the Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC). The DOJ also issued a warrant for the arrest of Daniel Shin, the other co-founder of Terraform Labs, who remains at large.
Kwon’s extradition hearing is scheduled for February 15, 2024, at the Singapore High Court. If extradited, he faces up to 20 years in prison for each count of fraud and up to 10 years for money laundering. Kwon has denied any wrongdoing and has hired a team of lawyers to fight his case.
The Terra stablecoin project was launched in 2018 as a blockchain-based platform that aims to create a global payment system powered by algorithmic stablecoins. The project claims to have over 2.5 million users and more than $10 billion in transaction volume. However, the project has been under scrutiny by regulators and law enforcement agencies since last year, when several reports exposed its dubious practices and lack of transparency.
Heidelberger Druckmaschinen reports profit decline
Meanwhile, German engineering company Heidelberger Druckmaschinen AG (HDM) has announced a decline in its net profit for the third quarter of fiscal year 2023/24.
The company, which specializes in printing and packaging solutions, reported a net profit of 12 million euros, down from 18 million euros in the same period last year. The company attributed the decline to lower sales volumes, higher raw material costs and unfavorable exchange rate effects.
HDM’s revenue for the third quarter was 533 million euros, a decrease of 6% compared to the previous year. The company’s operating profit (EBITDA) was 36 million euros, down from 46 million euros in the same quarter last year. The company’s EBITDA margin was 6.8%, compared to 8.3% in the prior year period.
The company said that it faced challenging market conditions due to the ongoing COVID-19 pandemic, which affected the demand for its products and services. The company also said that it implemented various measures to reduce costs and improve efficiency, such as streamlining its product portfolio, optimizing its production network and increasing its digitalization efforts.
HDM’s CEO Rainer Hundsdörfer said that the company was confident that it would achieve its full-year targets despite the difficult environment. He said that the company expected a moderate recovery in the fourth quarter, driven by higher order intake and improved customer sentiment.
He also said that the company was well-positioned to benefit from the long-term trends in the printing and packaging industry, such as sustainability, personalization and e-commerce.
According to a report by Market Research Future, HDM is one of the leading players in the global printing machinery market, with a market share of around 15%. The report forecasts that the market will grow at a compound annual growth rate (CAGR) of 4.1% from 2019 to 2025, reaching a value of 25.8 billion US dollars by the end of the forecast period.
The report identifies HDM as one of the key innovators in the market, offering advanced technologies and solutions for various printing applications.
HDM’s full-year guidance for fiscal year 2023/24 remains unchanged. The company expects to generate revenue of between 2.1 billion and 2.2 billion euros, and an EBITDA margin of between 6% and 7%. The company also expects to achieve a positive free cash flow and a net debt reduction of at least 100 million euros.