A former employee of Terraform Labs (TFL), the company behind the Terra ecosystem, has testified against former CEO Do Kwon and co-founder Shin Hyun-seong, also known as Daniel Shin.

According to a report from local media outlet Chosun, a former core developer who worked at a TFL affiliate firm and built the technology behind Terra, made statements against Kwon and Shin in a Seoul Southern District Court on Monday.

South Korean prosecutors have accused Kwon, Shin and TFL of defrauding investors through the false promotion of Terra’s stablecoin TerraUSD (UST).

The employee in question, called “Mr. Lee,” said he was aware that payments through UST would not be in line with the country’s regulations. When prosecutors asked how he was aware, he said that he “heard it through” Kwon. 

Lawyers for Shin and Kwon refuted Mr. Lee’s testimony, claiming that the statements were outright false. However, the witness testimony will likely go a long way in the South Korean prosecutors’ case against the former Terra executives.

Last year, the South Korean courts dismissed two requests for an arrest warrant for Shin from prosecutors. Although Shin has been named in the prosecutors’ case against TFL and faces charges of fraud and violating capital markets laws, the TFL co-founder maintains that he cut ties with the firm and Kwon in 2020 – well before the Terra ecosystem collapsed.

Meanwhile, in the U.S., Kwon faces charges from the Securities and Exchange Commission (SEC) over his role in orchestrating an alleged $40 billion fraud against investors.