A Seoul court on Thursday denied the arrest warrant for Daniel Shin, a co-founder of Terraform Labs, who is being investigated for allegedly obtaining illegal profits before its cryptocurrencies collapsed massively last year.

The Seoul Southern District Prosecutors Office requested the pretrial warrant to detain Shin on Monday on charges of fraud in connection with the wipeout of the company's cryptocurrencies, TerraUSD and Luna, in May.

The Seoul Southern District Court rejected the request, saying there still remain contentions regarding allegations against Shin and that he is unlikely to be a flight risk or destroy evidence.

The prosecution previously sought an arrest warrant for him in November, but the court rejected the request.

The prosecution filed the warrant again following the arrest of Do Kwon, another co-founder of the blockchain firm, in Montenegro last week. The prosecution is seeking his extradition.

Shin faces multiple charges of fraud, breach of duty, and violations of acts on capital markets, electronic financial transactions and financial information.

Prosecutors suspect Shin stored Luna, which had been pre-issued without notifying regular investors, and obtained illegal profits worth 140 billion won (US$107.7 million) by selling the tokens at a high point.

Shin is accused of failing to inform investors properly about the risk that the cryptocurrencies would crash.

Prosecutors also suspect customer information and funds of fintech firm Chai Corp., which Shin formerly headed, were used to promote Luna.

Shin has denied all charges, saying he has no connection with Terraform Labs following his departure from the company in March 2020, when he founded Chai.

Source: Yonhap News Agency