While the U.S. Securities and Exchange Commission (SEC) considers LUNA, the native token of the Terra ecosystem, a security, a court in South Korea has declared that it does not have attributes of a financial investment product regulated by the Capital Markets Act.
Security Violation Charges Against Terra Co-Founder Dismissed
According to local reports, the southern district court in Seoul has dismissed charges of securities violations against the co-founder of collapsed crypto issuer Terraform Labs Daniel Shin.
The court indicated in the judgment that LUNA (now LUNC) was a non-security under the Korean Capital Markets Act. South Korean prosecutors charged Shin, who left Terraform Labs in March of 2020 to focus on payments app Chai, with allegedly extracting illegal profits as he dumped $105 million of the LUNA token at a market top without notifying investors. The authorities were also seeking an arrest warrant for Shin, arguing that LUNA constitutes a financial investment security.
However, the judge has reportedly said, “It is difficult to see Luna Coin as a financial investment product regulated by the Capital Markets Act.”
In the latest ruling, the court also rejected the prosecutor’s request to seize the accused’s assets and arrest based on securities law infringements. The Seoul Southern District Court explained that it was hard to see that the property subject to the allegation had been “acquired by crime or an asset derived from it.”
The Fall Of Do Kwon
Some crypto pundits thought Do Hyeong Kwon — popularly known as Do Kwon — his algorithmic stablecoin TerraUSD and its sister token LUNA would take them to the promised land. But then the stablecoin veered away from its dollar peg. Everything unravelled. Over $50 billion evaporated. Life savings were erased.
An arrest warrant had been issued for Do Kwon, who co-founded Terraform Labs with Shin in 2018. Kwon, who had been on the run from authorities since the stunning implosion of the Terra ecosystem in May 2022, was finally apprehended by Montenegrin police last month for trying to travel with a fake passport. The SEC charged the South Korean native with violating securities law following his apprehension. Notably, Kwon’s lawyers are pushing to have these SEC charges dismissed.
Kwon recently suffered a legal blow as a United States judge denied his plea to bar the U.S. Securities and Exchange Commission (SEC) from obtaining certain records related to Terraform Lab’s operations in Singapore.
The former Terraform Labs CEO currently faces criminal fraud charges brought against him by U.S. prosecutors and charges relating to violating the Capital Markets Act back home in South Korea. Both the U.S. and South Korea have requested the extradition of the fallen crypto star, but he will likely first face trial in Montenegro.