LUNA is Not a Security according to the Korean Court

Photo of author

By Degen Lipsa

The first time a court has been explicit about the purported features of the token, a Korean court has determined that LUNA is not a security.

The native token of the Terra ecosystem, LUNA, has been ruled not to be a security by a South Korean District Court.

The court also denied the prosecution’s pleas to seize Shin Hyun-Seong, a co-founder of the Singapore-based Terraform Labs project, and other executives from the company, as well as to have them all arrested.

Korean Court Considers LUNA Non-Secure
Korean Court Considers LUNA Non-Secure

LUNA Is Not a Security Token

LUNA is not regarded as a security, the Seoul Southern District Court has officially said, according to a report published by a Korean media site, ilyo, on April 24. According to the court’s judgement, “It is difficult to view LUNA Coin as a financial investment product regulated by the Capital Markets Act.”

The most recent decision is noteworthy, however, because other courts have not been certain if Luna is a security token or not.

According to Shin’s attorney, the court also turned down several requests from the prosecution to issue an arrest warrant for the co-founder of Terraform Lab and other executives. Furthermore, the Southern District Court in Seoul rejected the prosecution’s requests to seize Shin’s property, finding that “it is difficult to see that the property subject to the claim is a property acquired by a crime or an asset derived from it.”

According to earlier reports, the co-founder of Terraform Labs appeared for questioning at the Seoul District Court for his role in the demise of algorithmic stablecoins LUNA and UST, which caused users to suffer losses of $40 billion.

Authorities in South Korea claim that Shin broke several laws, including the Electronic Financial Transactions Act and the Capital Markets Act. The former CEO, however, asserted that he left Terraform Labs in 2021, two years before the collapse of LUNA/UST.

Do Kwon’s Fate can’t be assumed

The South Korean District Court determined that LUNA is not a security, but American regulators have filed a lawsuit against Terraform Labs and co-founder Do Kwon for allegedly violating securities laws. According to a Securities Exchange Commission (SEC) lawsuit, both parties used cryptocurrency to offer and sell unregistered securities.

On the other side, Do Kwon, who was allegedly avoiding capture, was detained in Montenegro. Kwon reportedly transferred about $7 million to a legal office prior to Terra’s crash, according to other reports.

Leave a Comment