Key Takeaways
- The court stated that it is difficult to view Luna Coin as a financial investment product regulated by the Capital Markets Act.
- Court has dismissed the prosecution’s appeal for confiscating Terra co-founder Daniel Shin’s properties and his arrest based on securities law violations.
Former Terraform Labs CEO and co-founder Hyun-seong Shin have been cleared of security violations charges by a South Korean district court, which ruled that Luna, the native token of the LUNA ecosystem, is not a security under Korea’s Capital Markets Act. The court stated that it is difficult to view Luna Coin as a financial investment product regulated by the Capital Markets Act.”
It added that it is difficult to view that the property subject to the claim had been “acquired by a crime or an asset derived from it.” Shin’s lawyer stated, “The Arrest Court rejected all of the prosecution’s 10 or so requests for an arrest warrant against former CEO Shin and those involved in this case”
However, the prosecution is still focusing on the securities aspect of the native token and have further appealed to the Supreme Court against the verdict of the lower district court.
This ruling is significant as it provides some clarity on the legal status of Luna in Korea. The previous court rulings had used cautious language such as “there is room for dispute in terms of the law” adding that “it is questionable whether the Capital Market Act can be applied.”
The latest ruling is completing in contrast to the US Securities and Exchange Commission allegation. In February, SEC has filed a lawsuit against Terraform Labs and its founder, Do Kwon, for allegedly “orchestrating a multi-billion dollar crypto asset securities fraud.”
Do Kwon’s lawyers have now requested a U.S. court to dismiss charges brought against him by the SEC partly because of the lack of jurisdiction. The lawyers argue that Terraform didn’t conduct any public offerings of securities that mandates an SEC registration.
The former Terraform Labs CEO who has been arrested in Monetengro currently faces criminal fraud charges from US prosecutors and capital-markets law violations charges in South Korea.
