South Korean Court Declares Terra Classic Not a Security


Key Takeaways

  • LUNA (now LUNC) has been ruled not to be a security, according to the Seoul Southern District Court.
  • The court stated that it was difficult to consider LUNA as a financial investment product regulated by the Capital Markets Act.
  • Previous courts had used cautious language when discussing LUNA’s regulatory status.

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A ruling by the Seoul Southern District Court has decided that Terra’s native cryptocurrency, LUNC (formerly LUNA), should not be considered a security.

Not Regulated by the Capital Markets Act

The South Korean courts are making progress in their definition of cryptocurrencies.

Local news outlet Ilyo Shinmun reported that the Seoul Southern District Court has declared that LUNC, the cryptocurrency of Terra, should not be considered a security. The court stated in a case involving former Terraform Labs co-CEO Hyun-seong Shin that “it is difficult to view Luna Coin as a financial investment product regulated by the Capital Markets Act.”

Before this decision, the courts had been hesitant when discussing LUNA’s regulatory status, often using phrases such as “there is room for dispute in legal principles” and “it is questionable whether the Capital Market Act can be applied [to LUNA]”. However, the most recent decision categorically refutes the possibility of LUNA being regulated as a security.

The court also firmly dismissed an appeal by prosecutors against a prior decision to reject a confiscation request for Shin’s assets. Prosecutors had initially requested to seize Shin’s real-estate in South Korea, alleging that the property itself was acquired due to criminal activity. But the court deemed it “difficult to see that the property subject to the claim [was] a property acquired by a crime or an asset derived from it.”

Last Friday, Terra frontman Do Kwon filed to dismiss charges brought to him by the United States Securities and Exchange Commission, arguing that the U.S. regulatory body lacked the jurisdiction to sue him. At the moment, Kwon is being held in Montenegro, where he faces charges for document forgery. Both the United States and South Korea have expressed their intention to extradite him for prosecution.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other crypto assets.

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