A developer of Terraform Labs named Lee testified in court on Monday that co-founders Kwon Do-hyeong and Shin Hyun-seung advertised TerraUSD stablecoin as a payment option for investors, even though they knew that local regulations prohibited offering such services, according to local media reports.

This testimony occurred during the third court hearing for eight former members of Terraform Labs, including Shin Hyun-seung, according to Chosun Ilbo, a local media outlet. The full name of the former developer Lee was not disclosed due to South Korea's privacy regulations.

After the Terra-Luna crypto-currency project collapsed in 2022, South Korean prosecutors accused Do Kwon, Shin and Terraform Labs of jointly defrauding investors by promoting TerraUSD (UST) stablecoin as having a fixed value of $1 and being a payment option, among other charges.However, Shin claimed that at the time, the regulatory agency did not have a clear stance on the use of crypto as a payment method. In addition, Shin said he left Terraform Labs two years before the collapse and confirmed that he was not involved in the loss at that time.

Lee, a former developer,testified that Do Kwon (co-founder of Terraform Labs) once said that South Korea's financial regulations prohibited TerraUSD from being used as a payment method, indicating that Terra's executives were aware of the limitations of this stablecoin. But Shin's team argued that the testimony was not true.Meanwhile,Han Chang-joon,former chief financial officer (CFO) of Terra, who is a major partner of Do Kwon,was extradited from Montenegro to South Korea on Monday. Han Chang-joon is expected to arrive in Seoul in the afternoon on Tuesday, Asian time, and will be interrogated by South Korean prosecutors later, according to a report by local news agency Aju Business Daily.In March last year, Han Chang-joon and Kwon were arrested at the airport in Montenegro on charges of traveling with fake documents.Kwon is still being held in Montenegro as local authorities are still considering whether to extradite him to South Korea or theUnited States.