A South Korean court has ruled that the cryptocurrency token, Luna, is not a security. According to reports, the decision was made by the Seoul Central District Court, which dismissed a case filed by a group of investors claiming that the token was issued illegally. The ruling provides some clarity on the regulatory status of Luna, which is used on the Terra blockchain platform. It is expected to have a positive impact on the token’s market value and could encourage further adoption in South Korea where there is a growing interest in cryptocurrencies.
In a recent case, a South Korean district court has declared that LUNA, the native token of the Terra ecosystem, is not a security. Additionally, the court dismissed prosecutors’ requests to confiscate properties belonging to Terraform Labs co-founder Shin Hyun-Seong, and also arrest him along with other executives of the Singapore-based project. This ruling is notable in that other courts have not been clear on whether Luna is a securities token or not. The Seoul Southern District Court, in its ruling, stated, “It is difficult to view LUNA Coin as a financial investment product regulated by the Capital Markets Act.”
As previously reported on CryptoPotato, the Terraform Labs co-founder appeared for interrogation in the Seoul District Court regarding his involvement in the collapse of LUNA and algorithmic stablecoin UST, which resulted in losses worth $40 billion for users. According to South Korean authorities, Shin allegedly violated the Capital Markets Act and the Electronic Financial Transactions Act, along with other offenses. However, the former executive claimed that he left Terraform Labs two years before the LUNA/UST collapse in 2022.
While LUNA is not seen as a security according to the South Korean District Court, regulators in the United States have sued Terraform Labs and co-founder Do Kwon for securities violations. As stated in a lawsuit by the Securities Exchange Commission (SEC), both parties offered and sold unregistered securities through crypto.
Do Kwon, on the other hand, who has been reportedly evading authorities, was recently arrested in Montenegro. There were also reports that Kwon transferred approximately $7 million to a law firm before Terra’s crash.
In conclusion, though LUNA has been declared not a security by a South Korean court, Terraform Labs and co-founder Do Kwon continue to face legal battles in the US for allegedly violating securities regulations. The situation remains unclear and unpredictable as the case develops.