How Will the Legal Case Against Do Kwon Play Out in South Korea? - Ep. 401

Transcript

hey y'all I'm sure you've been following the dramatic news about dokwan the recent arrest Warren a South Korean Court released the Revelation that he is not in Singapore which until recently was the place he called home and finally just before the publication of this episode interpol's issuance of a red notice to arrest dokwon which went into law enforcement worldwide after the arrest warrant was issued Kwan published a tweet thread that began quote dear CT meaning crypto Twitter I will tell you what I am doing and where I am if one we are friends two we have plans to meet three we are involved in a gps-based web 3 game otherwise you have no business knowing

my GPS coordinates in order to learn more about the charges Quan is facing and what he himself might be thinking I invited South Korean crypto lawyer Zhong Beck Park and Zach Guzman the only person who has interviewed Quan since the collapse of Terra about what could happen to the Korean founder as we disclose right up front both of these guests have some conflicts of interest however it's challenging to find a South Korean crypto lawyer with zero ties to Terra Luna and I was satisfied that Zhong Beck's Financial relationship with Tara ended a while back and that he had the requisite knowledge to educate my largely Western audience Zach's company has investment from terraform Labs but as you'll hear he was able to give us insight into Doe's

recent thinking around the kind of charges he faces that I found valuable and frankly newsworthy after we wrapped Zhong Beck mentioned a Nuance that we hadn't discussed during the show he said that in Korea this is a criminal case and prosecutors are asserting that Luna is a security but that is not coming from the Korean Financial Services Commission or FSC which is the equivalent of the U.S Securities and Exchange Commission so there's no precedent for a Doe's case which means that this could actually create a guide for a Securities Law in Korea Zhang Beck also noted that some observers in Korea are speculating that the FSC gave the prosecutors some references regarding how Tara might fit

Securities requirements but he said that is not confirmed Jeong Beck is concerned that if the court convicts Quan on these criminal charges but it doesn't do a deep Securities analysis it could chill crypto innovation in Korea last note at the very end of the show as we are wrapping up and as I was asking Jung Beck how people can learn more about him and his work his audio recording stopped but I didn't realize it at the time since you won't hear his response you can check out the link in the show notes to learn more about his background without further Ado here is my interview with John Beck and Zach [Music] hi everyone welcome to Unchained your no hype resource for all things crypto I'm

your host Laura Shin author of The cryptopians I started covering crypto seven years ago and as a senior editor at Forbes was the first mainstream media reporter to cover cryptocurrency full-time this is the September 27 2022 episode of Unchained every other week unchain hosts a shopping blog where crypto insiders his team Qureshi Tom Schmidt Robert leschner and tarun chitra chop it up about the latest news in digital assets get the latest episode on YouTube and all podcast platforms chain analysis demystifies cryptocurrency by providing industry-leading compliance Market intelligence and investigation support for all crypto assets for organizations like Gemini crypto.com and block fi

maximize your potential with the leading blockchain data platform by visiting chainalysis.com Unchained whether you're crypto curious or a c-suite decision maker you have to check out web3 with a16z the chart topping technology podcast about the future of the next internet listen to web 3 with a16z on Apple podcasts Spotify or wherever you get your podcasts with the crypto.com app you can buy earn and spend crypto in one place download and get 25 with the code Laura Link in the description today's topic is Tara dokwon and the legal Fallout in Korea here to discuss

are Zach Guzman journalist and coinage host and jungbeck park partner specializing in blockchain and crypto assets at Bay Kim and Lee welcome Zach and Chong Beck thanks for having me thank you for having me so we should just start with some disclosures up front because you both have connections to Tara so jungbuck can you briefly explain your connection to Tara yeah we advise on some legal aspects of Terror project in early stage before they adapted the new algorithm okay and but your financial relationship with the company does not persist to this day yeah I don't have any Financial

relationship as of now okay and Zach you also have a conflict can you explain yeah as we disclosed before uh trustless media at the parent company that started kicked off that is a web 3 media incubator that started coinage has terraform as one of our investors among many and that is a disclosure we made before we uh started to dig into uh what happened with you so despite these conflicts I invited Zhang Beck since uh as you mentioned you no longer have that Financial relationship but you are intimately familiar with the case and the Korean legal scene and Zach you're here since you are the only person I believe to have done an interview with Joe Quan since the collapse of Tara so

listeners of this podcast have heard about the algorithmic stablecoin Tara whose implosion along with that of its sister coin Luna wiped out 60 billion dollars at the crypto markets in May taking down a number of other entities such as threes Capital Celsius and droiter along with them and in the last week a South Korean Court issued an arrest warrant for Tara's leader Joe Quan and Quan who had been living in Singapore May no longer be there but before we get into all these details about the arrest I wanted to start by filling in the background of the Terra Luna story in South Korea so John Beck describe for us how Tara Rose and fell

in Korea how big of a phenomenon was it with everyday Koreans as you know Terra came up as a very Softly As a one of the major stable coins in Global Market uh it's the same with Korean market and the Korean people or investors and then the same thing avoid to uh Daryl clef abruptly he came to Korean people and regulators and the country so when the clubs broke out many people and regulated the shocked about the southern thing and then since then Korean community and Society were wondering how

the Korean investigators or plus tutors will react to that phenomenon because there was a uh some very big issues about their legal nature and the many people who were damaged from the clefs of the terror and Luna and then there was some big discussion about whether it is a Securities or not or it could be subject to some criminal uh Earth or criminal behaviors but finally the latest news in Korea was that Prosecutors Office issued a rest

read against the Thor and some other people involved on the reason that uh Pera and Luna could be Securities especially uh investment country Securities and they could be followed in some category of criminal behaviors like fraud or some fundraising is not permission especially with the charge of infringing Capital Market act which provides the Securities definition and then some penalties uh regarding infringing of such a Securities the race station statement obligation so to reason why

the prosecutor office of slide capture Market Act based on Luna could be investment contract Securities is not known because the pressure offers the product filters office keep the reasoning very secretly as of now so we do not know the details of their reasoning they are just the full description of the what happened in Korea very briefly okay and a couple of questions before we dive into the details on that how big of a phenomenon was Terra Luna in Korea um I read that 280 000 people in Korea invested in it

which based on my calculations it's like a half percent of the entire population so was it seen as like something very popular that a lot of people were talking about or what was the perception of of it and also of of quan himself what was the perception of him yeah given the percentage of the population who invested invested into Luna the phenomena is regarding the trigger than the percentage of the investor the reasons are that first Logan and then other level creepers are Koreans and then there are some even those with small numbers many investors are quite

invested in money out of their whole SF into this project so it could give us some governmental authorities the previous shock otherwise no no shark and the third thing is that he is not in Korea as of now so it makes people more concerned about what will happen and then it gives them some devious feelings about concerned people yeah those are three reasons why Korean Society feel bigger than the portion of investment yeah and actually one last

question about until Quan before the collapse was he seen in Korea as like a big crypto star because I believe Tara was the most popular crypto project that had come out of Korea so until that moment was he seen as like a success story for the country yeah actually the ordinary citizens uh did not know him well people uh this phenomena but for communities or some investors or some experts in this space there are some dividing opinions and feelings towards him as is the case I

think with the global Community as well so some people have very a good feeling about him he is a kind of a leader in this community and then could he was regarded as an a very big figure to lead this stable coin and further other the crypto space on the other hand he was regarded quite a not central people he predicted too much and he is he could be arrogant so there are two colliding opinions about him so not so different from the rest of the world actually so Zach you interviewed

doe even after he knew that you know there was going to be this investigation um and I was curious did he place any conditions on your interview with him and if so what were they and what do you think they indicated in terms of his concerns about his potential legal issues no there weren't any conditions on the interview and I was actually kind of surprised and I'm sure John Beck would would probably agree from a legal standpoint if you are facing an investigation I think we all know and Laura you've been doing this for a long time generally people don't want to speak about anything if there is an ongoing investigation because you kind of corner yourself and you might give up any sort of defense and we've seen you

know innocent people face that issue before and lawyers just say it's problematic to ever go on the record and talk about things because you limit what you might be able to say or use as a defense in you know the court of law but when it comes to the court of public opinion you know to your point you hadn't said anything for months after the crash if there was another personal disclosure to add aside from the fact that you know trustless media has terraform as one of our investors among many that kicked off coinage the other one is personally I lost a lot of money in Tara as well so I was curious about this because you know I along with a lot of people saw the terror project object earlier and as it Rose and you know people began to believe in it we're

excited by the prospect of an algorithmic stable coin or what could mean to have crypto finally stand alone without the need of a centralized or you know dollar back stable coin out there so that was part of the Terra Mission and why I think to your point why a lot of people were excited by Tara and why a lot of people were sucked into the mission that Doe would talk about with a lot of energy on stage to bring more eyeballs into the terror Community but no there were there were no conditions and we made it a point I said look though if we're going to fly all the way to Singapore we're going to ask some tough questions we want the answers I personally want the answers because I don't know what happened here and nobody really knows what happened here and so yeah it's it's it's an ongoing thing

where I think you know even what we could ask in the interview I'm not a jury I don't have subpoena power so as much as we wanted to get out of it you know again we we did our best to get those answers and it hasn't spoken since the coinage interview but there are still a lot of unanswered he has sent a few Choice tweets which we will talk [Music] um but okay so let's Circle back to what jeongback mentioned early on about just what the charges were so you were saying that the way the charges are or maybe you know hopefully I I understood you correctly that essentially um the uh prosecutors are saying that um Tara maybe was a security is that what

you said earlier so can you can you just describe a little bit more like what does the law say and what are they charging dough okay we Korea have a capital Market act providing what are securities and then what kind of Securities there are and among others some tokens are being questioned as to whether they could be regarding the security Zone investment contract distributes so we think that Prosecutors Office could regard this Luna as a investment contrary to Securities so you have some details uh requirements for that type of Securities

anyway differently from other user cases uh very big high profile criminal cases on what basis prosecutor offers the charges against some people or some corporations they tend to um core reasoning for that but for this case they are very reserved to disclose the reasoning why they think Luna could be regarded at the investment country securities so we also are very wondering about their reasoning at the moment under the Capital Market that if you issue and uh probably offering to the

such security to uh to the public you are obliged to fire the registration statement with the Korean FSC which is a financial regulator so if you infringe that provision you are subject to some criminal the penalties so prosecutors I think they applied that penalty to this uh Luna project I think and the further to that they announced another charge as well the other one is fraud they think that he made some fraudulent activities towards um investors

with the initial investors who bought their tokens from the protocol initially and the last charge is fundraising without permission we have some ACT regarding fundraising without some approval permission especially when you fundraise some amount of money from several people giving them some commitment to give them some fixed interests or more than some amount of the interest or in whatever names some profits is subject to such act also it has got some criminal challenges oh wow

okay so this really ranges the gamut one quick question so earlier when you said that the the legal Community is wondering whether Prosecutor's reason is for saying that Luna is a security I you may not I don't know if you're aware but in the U.S for a few years now there's been a big question here over when crypto assets are securities versus when they're not and the current SEC chair says he thinks the vast majority of crypto assets are securities you know his predecessor kind of had a similar view not as not as severe there's a lot of other regulators and lawmakers that

disagree with that so in Korea is it the same where there's a lot of disagreement amongst regulators and lawmakers over how many crypto assets are securities yeah there are colliding opinions about that but uh as I already mentioned we have the express provisions on what is uh investment country securities to test it's quite similar to how we test under the U.S laws right but on regarding what tokens could be subject to such a Securities is quite controversial so with the or current

crypto exchanges they debuted their listed tokens if their list tokens are scheduled or not they collect some legal opinions regarding whether there is the tokens are scheduled which means that they do not list any huge talks at the moment so some tokens which is quite controversially debated as to the Securities character is quite few in Korea but in other sense many people or some businesses want to have some clear regulation on what is the spirit is or

not what token is scriptures or not so quite recently our FSC announced their guideline of what is a investment contract distributive which is quite helpful to understand what is Korean Regulators position only so the detailed requirements are quite similar to high test as well the initiator for that punishment of guideline is the actually not related to blockchain tokens but to other fragmented investment schemes which invested in some music capitalized work but the

reasoning is almost similar to The Tokens The Securities what's been happening here in the US is that recently now the SEC has done a few enforcement actions where they asserted that certain tokens were Securities without giving the reason for that and is that the same that's happening here in Luna because lawyers here are saying oh this is the sec's way of establishing jurisdiction without having to justify how they have the jurisdiction so is there a sense also in Korea that the Terra Luna debacle is being used basically for the financial Authority there to assert that certain tokens are securities without having to justify

their position so far Korean Financial Regulators have not expressed any public statement or Physicians towards whether it is uh security or not or can I jump in and ask a follow-up on that too because you know it's it's interesting too because your new president also ran on a pro-crypto stance pre-lunar crash and I feel like there was a lot of pride in the Luna project from what I could gather on the outside looking in uh as Laura said his most popular crypto project in Korea um and if you have a president who's pro-crypto and runs on that platform gets elected and then sees that project then collapse in it in a pretty shocking

way I mean has that impacted how how the president even looks at crypto and how has that also shifted kind of how Regulators are now moving more pressure that's good question so I also wanted to explain the new Commerce attitude towards the crypto space actually from the election phase a new Administration expressed their very friendly attitude towards the crypto and the dating businesses so from the presidential campaign Daisy they expressed the we will support Ico which was uh forbidden during the previous

administration the way to allow Aisha was the ieo which means that India exchange exchange offering and the other thing is the the new government to have some strong willingness to Foster nft or other type of crypto businesses but uh regarding if they go to SEO on Securities tokens they also want a very cautious uh attitude because if they allow some security tokens they realize that uh

Capital Market act needs to be amended which takes a long time so the the current situation about the sdoor security tokens is that we have confessed that it will take a little bit long for us to amend such a capital Market as allowing some security tokens or institutionalizing tokens in the meantime they will publish some sto guidelines hopefully by end of this year so they are preparing some contents for that the other thing they announced is that before the amendment of the Capital

Market Act they will actively Implement sandbox projects which the business think that their project is very Innovative adopting token economy or some other valuable businesses giving very positive influence over Korean economy so that's the core policy of the new registration but regarding security type tokens they are also very cautious attitude as of now yeah actually what you just mentioned there it sounds similar to something that one of the SEC Commissioners Hester purse who's very

pro-crypto has proposed here she calls it the token Safe Harbor but it sounds similar I wanted to ask you now about the second chart that you mentioned about the fraud so what were some of did the prosecutors give any examples of the statements that they were looking at in terms of you know what they felt constituted the fraud is not definitely will be accepted by the court judgment yeah it's not but anyway according to their probable uh arguments or reasoning I think uh with some tokens which are sold from the protocol at initial stage not

sold through the exchanges or others right they had something like like before the network launched you mean like in the pre-sale or something or uh yeah yeah because uh I guess that uh their reasoning could contain that the issue or the seller uh did not disclose all relevant information properly to the some proper level which is regarding the reasonable so it's a kind of misrepresentation I think I guess that is their reasoning for such a fraudulent Behavior

charge okay and Zach I know you've done a ton of reporting on both Joe and terraform Labs um and I wondered if you saw any potential either actions or statements by any of those actors that you thought investigators might be looking at or that might trip up against some of these charges that jean-back mentioned yeah I mean that's that's to me what's pretty interesting here right when we talk about failure versus fraud and that's kind of what uh the coinage media interview with dough kind of gets at is you know if there were those issues before it's it's kind of interesting to see prosecutors bring them you know if those were the issues at launch why they bring them now post crash and why the

president goes from being pro-crypto to not very crypto friendly after the crash it's it's almost like the Optics are leading kind of what's happening in terms of the investigation obviously X post facto I'm sure prosecutors might not be giving it that much attention but now it's a huge thing and a lot of people including myself lost a lot of money in it so it changes kind of the way you look at it when we were chatting with doe in Singapore about some of the prospective charges obviously that interview was pre uh the announcement around the charges but obviously uh in the months after the crash there was this investigation happening so he was well aware of what could happen and he stressed you know not in the interview but it was off camera as we were leaving kind of the capital markets Act charges that could be brought and how he felt

that those would be kind of a catch-all and I appreciate the questions you're asking John back because you know a lot of times I think Americans watching this all play out might assume laws there are the same as the laws here and obviously every crypto founder is dealing with regulations across borders and having to deal with Regulators in every country but he did kind of stress the point that you know Capital markets is kind of a catch-all in his words obviously I'm not a lawyer and don't know anything about Korean law but he stressed to us that it was kind of a different charge that might be one that he wasn't necessarily prepared to face at the time to go back to Korea and talk about because as it sounds like we're hearing now it's a bit of a wishy-washy catch-all thing

depending on how prosecutors want to go but that was one thing that was different than I guess you know some of the other charges and I appreciate the line of questioning here because John back it sounds like the capital markets Act is a bit of a catch-all for anything that could be related to just disclosures around some of these things or the way that Regulators view them as Securities which Dolores point is also a bit of a mess here in the U.S when it comes to what is and what is not wait I'm sorry Zach did you just say that do Quan said that if he was charged with a violation of the capital markets act that he would not go back to you said he was not prepared to go back to Korea to face that so what did what did those words mean when we asked and you know

the exact words in our interview was look how are you prepared to face some of the charges that could come from this and his response to that was look when you're dealing with due process it's not a it's not a question of whether or not you're prepared to face them it's what you will provide to the prosecutors and he said that he wanted to be as honest and transparent as possible in the moment since that interview you know people could look at that and say how honest and transparent is it now if you have prosecutors saying uh you're on the run and you're not answering our questions that becomes a question of how honest and transparent is that um but no the capital markets thing was a stress point around uh whether or not it was an insight and the interview was an insight into how doe Was preparing to face some

of this as his defense strategies were kind of being mounted um and it was a question of okay how are prosecutors going to play this on the offensive that might dictate how a man plays it on the defensive and capital markets was one charge that he specifically said is kind of in the camp of all right that's up to kind of the prosecutors and it's no different I think than here where you know you've got a lot of people dealing with nfts who are facing charges now around insider trading in that case with open C and it's a question of well that's not really defined if an nft is a security so I don't know how prosecutors are going to play that one either and so that was one distinct from fraud and the other charges that John back is kind of bringing up that Doe mentioned in the

interview off camera that Capital markets controls charges would be distinct in his eyes as far as ones that he felt less comfortable going back to Korea what is that Capital markets controls I think the charges tied to the capital markets act that young jungbeck's describing junkback I'd be curious to kind of know a little bit more about that as well I mean it sounded like you're describing the capital markets act as kind of a catch-all for Securities issues but I mean I was kind of curious as a lawyer who knows the law better than probably we do were you surprised to kind of see the way that that was one of the charges they listed there or or what was kind of the legal reaction to see before we go into that question Zach I just want to make sure I fully understand what you

were saying so are you saying that Doe was saying if he was charged with a violation of the capital markets act that he would not go back to Korea because he basically felt that that wasn't an unjustified charge is that what you were saying there yeah he was saying that you know obviously this interview happened before the charges came out so we were just talking prospectively about where do you see this investigation going and what are the potential things that could happen and one of the things that he raised was the capital markets Act is a bit of a catch-all right now similar to kind of the way that the U.S still hasn't figured out what crypto is is it a security is it not a security that was one of the charges that he was saying I would I don't know what's going to

happen on that front and so that's one if that was the only charge that they had that he was I think reluctant to kind of the idea of going back to Korea because obviously if you don't know what the charges entail it becomes a little difficult but this was obviously weeks before everything else that's happened since so I wouldn't want to extrapolate too much from you know a discussion we had a month ago before you know this warrant was issued and everything else it's a bit dated now but it was just you know again our interview was a discussion into you how do you see this playing out in the fraud versus failure which I think is the most fascinating thing here because now you have all of a sudden basically it wasn't an issue when it was working fine and no one had lost

money but now you have the project collapsed and a lot of people including myself lost money and now there's the attention on it and trying to figure it out where there wasn't that attention before and even the president was pro-crypta so you can see how quickly these change depend on I guess the events okay well we're going to talk um a little bit more about you know the legal process but first a quick word from the sponsors who make the show possible eager to make more informed decisions around crypto using data you can trust chain analysis is here to help chain analysis demystifies cryptocurrency by providing industry-leading compliance Market intelligence and investigation support for all crypto assets for organizations like Gemini crypto.com and

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with frequent guest appearances and hosting by Chris Dixon listen to web 3 with a16z today on Apple podcasts Spotify or wherever you get your podcasts back to my conversation with Zach and John Beck as we just mentioned it seems that you know when doe was anticipating that perhaps he might be charged with the violation of the capital markets act that he had kind of indicated he may not be willing to go back to Korea to face that kind of charge it seems that you know maybe the reason for that as Zach has articulated is that he felt that the government didn't really have a view necessarily or a set view on the Securities Law there

and how it applies to crypto but maybe it was looking to set some kind of precedent maybe that's why he wasn't willing but you know after the court issued the arrest warrant Singaporean police reported that dokwan is actually not in Singapore which Zach I know you interviewed him there and he has been living there you know in recent time times however after this news broke Quan then tweeted that he was not on the run so John Peck I was curious how did this tweet play out in Korea what is the perception of whether or not Quan actually is on the run I'm not sure where he is and then whether he runs out or not Korean New

York Community is also very keen on what arguments about what reasoning practices has taken and for their charging and then it is quite uh rare for Korean prosecutors to fly this uh impingement of Capital Market act to tokens and then as I said the Korean Financial Regulators FSC never expressed their official interpretation or some their guidelines on what kind of token could be so I'm not sure whether he can come to Korea or not but regardless of uh

whether he come to Korea or not to process will take long I think because there could be very strong argument and counter arguments regarding whether it is scripted or not because we never had some presidents over it and Zach were you surprised when you found out that dough was no longer in Singapore or based on your conversation is that what you had expected that if that was the charge then he would try to avoid it no I mean you know we had a discussion around you know why he was in Singapore and I think that was something that came up in our interview which anyone can watch at coinage. media you know it's it's it was hey it looks bad from the

outside looking in you know you're not in the country where they're bringing these charges you're a Korean national you're not there anymore why are you in Singapore and then the crash happened and a lot of people connected those dots to say oh he's on the Run even when he was going to Singapore because why aren't you still in Korea and if it crashed why are you moving your company to Singapore as he explained in the interview that move was planned ahead of time and you know even before the crash uh ironically he was saying that he had more unwanted attention when things were going well and he had a baby with his wife and wanted to move somewhere a bit safer and kind of the celebrity status of dokwon in Korea was getting too high in his words and he didn't necessarily feel as safe so that move to Singapore's

plan pre-crash so that was one thing that he you know clarified in the interview as far as leaving from Singapore afterwards yeah I was a little surprised just given the fact that you know that was the whole reason he was in Singapore in the first place but in the news coverage that happened since perhaps I could have added additional you know Spotlight on him being in Singapore and maybe that was reason to then leave Singapore right right after the arrest Warren is issued yeah I mean well he was in he was in Singapore when Daniel shin had his action when we were there for the interview in Singapore between day one and day two his co-founder of you know Tara chai um Daniel Shin his house was raided by Korean prosecutors so all of this was

playing out and you know that was interesting because he was in Singapore then and already you could make the case that he wasn't really in Korea for that part of the investigation so those are two things I guess that are in the timeline that came up in our interview as far as why he was even in Singapore to begin so are you saying that you it feels like you you don't connect the fact that he's no longer in Singapore to the arrest Warren do you or do you not I mean I don't know I'm just watching this play out like everybody else is right you know as far as that happened I have no idea where Joe Quan is right now nobody really does I don't think and it's odd to see him tweeting about him being quote not on the run when Korean prosecutors are

saying he is on the run and no one really knows what's going on but I don't know anything about his thoughts on that now because our interview is free all of this but it didn't sound like at the time that there was any Playbook around leaving Singapore because of anything changing and I don't know I was actually kind of surprised because I don't know what happens next and John Beck probably knows better here and I'd be curious to know how that you know allows anyone to travel if you revoke your passport and what happens there um as far as kind of eventually getting some of the answers to the questions that we tried to get but again don't have subpoena power to deliver on but yeah I'm I mean I'm kind of shocked that all this is playing out in the way that

it is in terms of a man on the Run slash not on the Run but also on the Run same time yeah I mean you know we'll see where he actually is but it seems like if that was his home for the most recent time and then suddenly now he's not in Singapore it does seem like it's probably the case that he is even though he denied it you know it's good that you brought up this issue around how the country wants to revoke his passport John Beck I was very curious I I have no idea you know I'm I'm not a lawyer I typically actually don't follow too many legal cases so how common is that for prosecutors to want to revoke someone's passport and how effective is that do

you think that that move will result in Quan having to return to Korea yeah it's not commonly happening uh events yeah the application of a passport and I think I'm not a criminal lawyer so and not immigration lawyer lawyer but I think uh the requirements for revoking passport will be quite strict but uh given the importance of this case I think prosecutors will try to fulfill such requirements and I think they may uh fulfill this requirements once the passport is revoked I think they will

have a tour to Korea and so I don't know how this works through my coverage of crypto I've been finding myself Googling often you know which countries have an extradition treaty with the us or things like that and so when someone simply just doesn't have a passport does this issue of extraditions even come up or is there are there certain countries that Joe could simply go to even without a passport and not worry about being extradited to Korea or is it that without the passport pretty much that will result him being sent back to Korea how does that you know what are the options there if any so what are your

two options at first being revoked or what I meant was more like paths so let's let's say that the passport is revoked then is there any possibility for Joe to still avoid going to Korea or will he pretty much without that have to go back to Korea I think once uh passport is in the Box uh there wouldn't be no other way to not to return to Korea I think I I remember that there was a very high for par case regarding revocation of passport in a few years ago with a different type of case but with that case I think through some Embassy in some relevant country he maybe see

through that Embassy in that little country returned to Korea I think but as I told you the requirements for revocation of passport I think a very strict meaning that prosecutors may not be able to revoke it is that what you're saying I'm not sure but I think they made some thing about the possibility of replication I think that they have some preparation for preparing that requirement I guess okay okay so if you were to place some percentage on you know the likelihood that it won't be revoked what percentage would you give it it's not easy to give some percentage

more more than 50 if I were a criminal lawyers I could give even more exact number but I don't know so yeah okay okay and last thing I wanted to add here was that the prosecutors have asked to enter Paul to place Joe on the Red List which obviously would get the international community policing Community galvanized to help bring DOTA Justice in Korea so again uh seems like there is going to be a lot of pressure on him so now let's talk about the fraud versus failure issue I know at least in the crypto community that a lot of people feel that Tara was more of a failure than a fraud and I've heard people say things like Phil failing at something is not a crime

I was curious like you know how does Korean law look at situations like this does it seem like prosecutors are making that distinction or not yeah as you pointed out uh fraudulent uh criminal act is quite based on very uh usual uh criminal Theory right there is no other the special legal argument about tokens right so for instance we can have many a small a wrongful product which is the product components right but this is not the case right

uh they made some white paper disclosing all their factors and some other risk factors I think so and then they did not have some other Express or wrongful behaviors beyond the uh that white paper I think so in this sense it seems not easy for prosecutors to cast it some fraudulent behavior and there is some tendency with the prosecutor office uh two or five some fraudulent Doctrine towards some specific certain criminal behaviors or some wrongful behaviors when they have a big volume of

victimized people who are they have a big amount of damages to some concerned people I'm not sure such charging will be accepted by the court and Zach you seem to view this as almost like a political move that when Tara was a success people were fine with it in Korea but that once it failed that then they kind of retroactively felt that it had violated certain things but you know when it comes to these kinds of issues there are a number of reports that sort of show that Tara may not have been you know a typical decentralized Finance project and really was more centralized in your investigation of Tara what was

your takeaway did you feel that really it was doe who I mean he did say in his in the interview with you that it really came down to him and so do you think it was centralized in that fashion yeah I think I think that seems to be a case across all crypto projects right it's like everything claims to be decentralized until you see what happens when problems arise and then it comes down to a very centralized team or a more limited team than I think people might realize to fix some of those issues when they arise and that's not just a terror specific thing but I think that's a thing that you know happens all across crypto but yeah I do think that you know a lot of the key decisions eventually came down to do and that's something that came up in our interview

as well which he also said was kind of a negative and the weird thing that's also going on as this all plays out in the courts is that you have Luna 2.0 which you relaunched that doesn't have a stable coin attached to it and that's freely trading on the market almost as kind of like a token that's tied to is this a fraud is it not because people are still putting their money into Luna 2.0 and I guess signifying that they trust that project now so that's kind of an interesting thing that's playing out this is so unique as John Black's kind of going through all these things it's like there is no precedent in a lot of these cases as they're applied to crypto so I feel like both sides are just as confused but yeah when it comes to that aspect of it it is kind of uh I suppose

uncharted waters for a lot of this and you know a lot of kind of the defense when a lot of this was happening and kind of trying to fix it I think everyone was tied to all right what's Joe gonna do and was looking at those Tweets in trying to like fix UST as it depegged and I think that is obviously a huge problem when you think about this was all supposed to be decentralized from the very beginning and you know as doe raised in our interview as well some of those mechanisms weren't ready for prime time or put in place that terraform was trying to work on not that that's a defense at all for what went wrong but that was kind of interesting in terms of what could have happened if more of these things worked and that's just a reality of any project building in live

time in web 3 to jungbeck's point I mean you can put up all those disclosures and try and rid yourself of maybe some of the issues if you say look these are the potential risks with our project but if people don't understand those risks and if exchanges aren't really upfront with those risks and are advertising algorithmically backstable coins as if they're dollar back stable coins who's at fault when it comes to you know the public being hurt by that when it does collapse and I think that those are the questions right now that was pretty fascinating to ask Joe is is this on you is it on the exchanges who's really to blame here and there are class action lawsuits against some of those exchanges as well as terraform for not really being upfront with some of those risks and I think that's really I think we're

precedent in this case and all the other ones around centralization are probably going to come from is who is on the hook when things don't go well and who's to blame yeah all right so I did want to also ask about some of these other associates that were charged in chongpeck what's your take on kind of who they are and what their involvement in Tara is and how how much it is that prosecutors will go after kind of the whole group of terraform or a larger group of terraform Labs rather than just do himself it really depends on the picture background so or put your background are not known to the public including me so maybe there could be charges there could be

different to uh charged persons depending on what charges are fraud fundraising without permission or imprinting Capital Market act so maybe the subject activities could be different I think so the extent of the charged people could be different trending on the charging themselves for instance in case of fraud if you are collaborate with others regardless of how many peoples are involved or there could be some core actors right and then infringing Capital Market act has very

complicated requirements right as you might know you should invest in some money or monetary value and then investing in some joint Enterprise which is the mainly conducted by other people and then finally they should get some right to receive some traffic Rising pet debt uh The Joint Enterprise so in that case for certain people to be charged against the influencing Capital Market you should act all those the conforms together so for instance if you are just involved in developing some algorithm

yeah protocol you are not subject to such a violation of crypto Matrix I think and I was also curious do you think there's a chance that prosecutors will or the government will seize either does or um terraform Labs Financial assets they have their own way of uh free Assets in accordance the some Enforcement Act I think but I'm not sure there are some real Assets in Korea as of now some of it is Bitcoin has revealed in the interview with Zach which you know um unless it's held on an exchange I don't think they're going to be able to

get that um and then one other thing I wanted to ask just nuts and bolts so what are the minimum and maximum sentences for these charges that Joe is facing oh for the or maybe there's not a minimum or I'm not sure depending on the kind of the charges the degree of infinity is differs right so approach could be a minimum three years free imprisonment but uh if it involves the bigger amount there is a special law increasing increasing some minimum infringement period I think for instance five or ten years right for

minimum yeah yeah and is there a maximum sentence as I told you I'm not criminal lawyer sir but uh I I can check very uh promptly if time allows I will check uh Zach I want to ask you did doe talk at all about how he felt about the prospect that he might go to prison yeah I mean honestly that was pretty fascinating and again you know this is this is someone who was I think heralded as the founder of a top 10 crypto project just months before was seen as one of the most you know loud eccentric and accomplished crypto Founders to go from basically zero to top ten in a matter of years and then Flash Forward a few months and I'm on the streets of Singapore as he's left his home of country asking him about the

prospects of jail time it's a wild night and day kind of situation in crypto for a project like that and pretty wild for anyone who followed it or lost money in it but yeah the question was you know what are the prospects and how prepared are you to face these charges and you know the realistics is jangbeck's describing there is jail time and are you prepared to go back to Korea for jail and his answer to that in our piece on Coinstar media was look life is long is what he said and I was kind of struck by that I stopped on the street when he said that because pretty wild to think about you know all of this falling apart and then the prospect is okay I could be in jail and he was prepared for that it's almost as if you know if the charges are brought

and I'm found guilty and I have to go to jail you know life is long and if that's the way it's looked at then you know that's what happens it's fascinating too I think from a character study I mean you know Joe is a guy who served in Korea's military and does feel attached to Korean that was kind of the line of questioning was look your family's there I mean do you feel like you want to go back and I think there was a sense of that and obviously no person who's brought to kind of face charges ever does so I guess or ever would have kind of you know the thinking that okay I can face these charges on my terms that's not the way that we do things here in the US either you kind of face them when the lawyers say or prosecutors say these

are the charges and this is how you have to face them so that's kind of an interesting piece but you know at least is what he told us is life is long and if I have to face those charges I'm convicted you got the sense from that at least that he was prepared to face the prospect yeah given that statement and then the um fact that he wasn't in Singapore after the arrest warrant um those things um obviously aren't odds with each other yeah so there's a lot that seems at odds through the whole story right it's it's strange uh the way that everything kind of played out and there's inconsistencies there for sure especially if you think about failure versus fraud in the prospects of the risks that doe and everyone at Tara for sure were aware of not even just for a dollar Peg stable coin but any currency

in history that tries to stay dollar pegged those risks are obvious to anyone who's ever studied economics um and so the inconsistencies there if you appreciate those and understand those to say oh wow this went to zero and I would have never guessed that this could have happened also seems pretty inconsistent as well as far as risks and disclosures are concerned so yeah there's a lot of inconsistencies that we raised and kind of held doe to account to in the interview in that two-part Series yeah I mean I definitely would say like the level of arrogance he showed and then you know the history of algorithmic stable coins which largely have all failed uh it just again doesn't compute I so maybe we're not gonna find out because I unless do you are you close to uh the for ordinary fraudi

fraud uh it's subject to uh less than 10 years imprisonment or 20 000 US Dollars around uh penalty uh fine and then as I told you if the damage is over a certain amount like uh five uh billion Korean one is subject to a lifetime imprisonment or more than five years infringement okay and so I don't know the exchange rate but I'm assuming terraform Labs is or sorry the uh the Terra project is above that threshold yeah yeah uh based on all

the available information so far if uh we assume that the particular strategy will be accepted by court maybe the damage amount will be exceeding that amount I think yeah it seems so okay last couple of questions I also just wanted to ask about the class action lawsuit in Korea against doe and terraform Labs do you have any update on where that case is now there was a criminal claimant uh who brought their claimant to uh letter to plus Jewelers at the beginning of this all procedure

but I I have not heard about any civil litigation class litigation so far but I'm not sure uh it might happen in coming months I think okay and Zach did Joe talk about that at all with you the class action lawsuits no we didn't get too much into the class action lawsuits versus uh the criminal ones that I think you know are right now as we just heard their life imprisonment and all the charges there a bit higher than the Civil ones so we focused most of our time on that and what went wrong but I think there have even been a few that have popped up since our interview as well so I mean those class action lawsuits depending on the jurisdictions this is a global problem they're popping up in almost every country including I

think in the US as well against Finance us who's attached to you listing some of the Terra coins as well so I mean this is is a big one that I guess on a civil front now brings in all the exchanges that ever listed those as well yeah I mean yeah the impact of this is you know Global and huge I mean I saw you mention in your interview that your co-founders family friend committed suicide over this so um there's been like real real real damages to people um okay so we're over time but I did just want to ask one last question of Jean Beck overall how would you say the whole Tara debacle has affected the perception of crypto by the public in Korea and the reason I'm curious about this is that

ever since 2017 the perception outside of Korea is that Korea has been much more enthusiastic pretty much than any other country in the world about crypto so I was curious if this whole debacle has dampened fat or if it still remains it's quite a big influencing the phenomena and the events is true and then at the beginning of outbreak of this uh events uh many people were afraid of uh having the Old Market or Community will be very decreased but I think it has been recovered gradually so of course the

other influence is that some people who did not know about the crypto space began to know who Logan is and then what's happening in this community this means that more people get to know this phenomenon and what token is and what the issues are right it's kind of some black marketing I think and then four communities and some experts in this area they are still afraid of having some bad effects on community or the the public but they think uh uh this

event could be another chance to make more a lot and then to have more balanced to attitude or thoughts about token and the token economy so it could be a good lesson and then could it be good impact on the market yeah I would agree uh hopefully yeah this will lead to more tempered attitudes toward crypto um rather than kind of blind faith that it's always going to be number go up okay well both of you this has been such a great discussion I was so glad we were able to make this happen and thank you

jungbeck for doing this Friday night your time um probably not your favorite time to be working but it helped us you know just make sure that we had all the latest news out of Korea at least for this work week and Zach thank you for waking up early to um to record this where can people learn more about each of you and your work so for us I mean you know the interview I think it's still the only interview that does given you can go to coin and shot Media or follow our YouTube page or on Twitter uh coinage media to find more about that and the community owned model that we're trying to prove out in web 3 right now using nfts and verifiable co-ownership Cone uh crypto show to focus in on all these big issues facing

it but people can go watch that interview part one and part two to learn more about dose thinking around what happened here in the failure versus fraud debate around terrorist collapse junk back okay great well it has been such a pleasure having you both on Unchained yeah thanks so much for having us Laura appreciate it thanks so much for joining us today to learn more about the legal case against Tara and tokwan check out the show notes for this episode Unchained is produced by me Laura Shin hold up from Anthony Yoon Matt pilchard fonoranovich Tama jimdar Shashank and CLK transcription thanks for listening thank you