How South Korea’s National Assembly Got Stood Up by Crypto Industry Reps at Terra Hearing

Only two crypto executives represented the industry, though lawmakers asked five to attend.

AccessTimeIconOct 26, 2022 at 1:32 p.m. UTC
Updated Oct 26, 2022 at 3:41 p.m. UTC

South Korean lawmakers want to question the crypto industry about its recent failures – but only two witnesses showed up to a hearing.

Two out of five witnesses from the industry showed up to testify before South Korea’s National Assembly hearings on Monday on the crash of multibillion-dollar enterprise Terraform Labs and other crypto failures.

The hearings ended with lawmakers frustrated by the no-shows, CoinDesk Korea reported. Several lawmakers called for charges to be brought against those who didn’t show up, according to the Korea Times.

Terra’s crash set off one of the worst market downturns in crypto’s history, prompting lawmakers to call for more oversight and Korean authorities to take a tougher line against the industry.

Lawmakers used a series of annual hearings where they could question government agencies and relevant witnesses from businesses about pressing issues as an opportunity to investigate Terra’s collapse.

Unable to force Terra co-founder Do Kwon – who might be an international fugitive now – to appear before the assembly, lawmakers selected representatives from the country’s crypto industry to field questions.

Lee Seok-woo, CEO of Dunamu, which runs South Korea’s largest crypto exchange Upbit, appeared as a witness to speak about an Upbit system failure. He had answered questions about the Terra crash earlier this month at the audit of South Korea’s top financial regulator, the Financial Services Commission, according to Chosun Ilbo, a South Korean newspaper.

The no-shows included Lee Jung-hoon and Kang Jong-hyun, former chairman and current shareholder of crypto exchange Bithumb, respectively, along with Simon Kim, CEO of venture-capital firm Hashed, and Chai CEO Daniel Shin, who co-founded the Luna network, which is built on the Terra blockchain.

“The continued absence of representatives such as Daniel Shin, who is most responsible for the LUNA incident, is an act of ignoring the 280,000 victims,” lawmaker Yoon Sang-hyun said, according to Chosun Ilbo.

Luna was a digital token related to Terra's stablecoin. It imploded along with the collapse of the Terra network in May.

Shin said that he couldn't attend as a witness and answer questions on the same case that South Korean prosecutors are investigating (meaning the Terra crash), CoinDesk Korea reported.

Lee Jae-won, CEO of Bithumb, attended the hearing in place of Lee Jung-hoon. Lee Jae-won wasn't on the original witness list.

The country’s prosecutors have charged Lee Jung-hoon with stealing $70 million in a business deal. He attended his trial in person on Tuesday. Monday’s hearing also intended to cover suspicions that the ARW coin was subject to price manipulation and questions about the ownership structure of Bithumb, according to CoinDesk Korea.

Lee said that he was suffering from depression and a panic disorder and cited that as his reasons for not attending the hearing on Monday, CoinDesk Korea reported.

Lee and Shin were already no-shows at a previous Terra-related audit by South Korea’s top financial regulator, the Financial Services Commission, earlier this month.

Hashed’s Kim likewise cited his mental state for his absence at the hearing.

“I have been suffering from anxiety disorders and panic disorders due to extreme mental stress since the Luna-Terra crash,” Kim said. Hashed was an early investor in Terraform Labs.

Kang also submitted a written reason for his absence. CoinDesk has reached out for comment.

Not appearing at a hearing without justifiable reasons is punishable by imprisonment for up to three years or subject to a fine between 10 million and 30 million won (between $7,000 and $21,000).

Both the ruling and opposition parties agreed in advance to press charges against Lee Jung-hoon if he didn't attend the hearings, CoinDesk Korea reported.

“It seems like that the witnesses didn't attend and didn’t have acceptable reasons,” lawmaker Baek Hye-ryeon said at the hearing. She said that once both parties come to an agreement, they will file a complaint, according to the report.

A source close to the country’s lawmakers told CoinDesk that the “National Assembly hearings are over. But they [the lawmakers] are not done with Terra, Bithumb and Hashed.”


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Lavender Au

Lavender Au is a CoinDesk reporter with a focus on regulation in Asia. She holds BTC, ETH, NEAR, KSM and SAITO.