TL:DR
- A South Korean court dismissed charges of security violations against former Terraform Labs CEO and co-founder Hyun-seong Shin and deemed LUNA as a non-security under Korea’s Capital Markets Act.
- The latest ruling is more notable because it states categorically that Luna is not a security.
- The judgment by the Korean district court is in contrast to the stance of the United States Securities and Exchange Commission, which has charged Terraform Labs and its founder, Do Kwon, with violation of securities law.
Terraform Labs co-founder Hyun-seong Shin has had charges of security violations dismissed by a South Korean district court. LUNA, the native token of the LUNA ecosystem, was deemed a non-security under Korea’s Capital Markets Act. The ruling comes as other courts have used cautious language in their verdicts. The latest ruling makes the Terra-LUNA saga a case of fraud and breach of trust rather than a violation of the Capital Markets Act. However, the prosecution is still focusing on the securities aspect of the native token and has also appealed to the Supreme Court against the verdict of the lower district court.
In a recent development, the lawyer representing the former CEO said that the court rejected the prosecution’s requests for an arrest warrant for his client and individuals associated with this case. Luna could not easily be considered an investment product based on the court ruling. The latest judgment is more notable because it states categorically that Luna is not a security, which is in contrast to the stance of the US Securities and Exchange Commission (SEC), which has charged Terraform Labs and its founder, Do Kwon, with violation of securities law. However, Kwon’s lawyers have denied the SEC’s securities fraud allegations.
Do Kwon’s lawyers have requested the dismissal of charges brought against him by the SEC partly because of the lack of jurisdiction, court filings from Friday show. In its civil lawsuit against Kwon, the SEC failed to prove “personal jurisdiction” as products referenced by the regulator were “available to the world and not directed at US persons.” The stablecoin UST, a digital asset involved in the case, doesn’t fall under the purview of the SEC because it is a currency and not a security. Kwon still faces criminal fraud charges from US prosecutors, as well as charges of capital-markets law violations in South Korea. Both countries have requested the extradition of the former executive who must first face trial in Montenegro.
The Korean district court ruling is a significant win for Terraform Labs co-founder Hyun-seong Shin, who was accused of violating the Capital Markets Act. The court rejected the prosecution’s request for property confiscation, stating that it was difficult to see that the property subject to the claim had been “acquired by a crime or an asset derived from it.” The court’s observation that LUNA is not a financial investment product regulated by the Capital Markets Act has significant implications for the token and the LUNA ecosystem.
The ruling could also affect the broader crypto industry’s stance on securities, as regulators worldwide have been grappling with the question of whether crypto tokens constitute securities. The judgment by the Korean district court is a significant development for the Terra-LUNA saga, making it a case of fraud and breach of trust rather than a violation of the Capital Markets Act. However, the prosecution still believes that LUNA’s securities aspect has violated the law, and the Supreme Court will have to make a final verdict.
In conclusion, the South Korean court’s recent ruling that LUNA is not a security under the country’s Capital Markets Act is a significant victory for Terraform Labs co-founder Hyun-seong Shin. It is also a significant development for the broader crypto industry, as regulators worldwide have been grappling with the question of whether crypto tokens constitute securities. The judgment has implications for the Terra-LUNA saga, which is now a case of fraud and breach of trust rather than a violation of the Capital Markets Act. However, the prosecution is still focusing on the securities aspect of the native token, and the Supreme Court will have to make a final verdict.
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