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Terra Classic Isn’t a Security, Says South Korean Court

A South Korean court has ruled that LUNC (formerly LUNA) could not be classified as a security.

Terra Classic Isn’t a Security, Says South Korean Court
Shutterstock cover by kdshutterman

Key Takeaways

  • LUNA (now LUNC) should not be considered a security, according to the Seoul Southern District Court.
  • “It is difficult to view Luna Coin as a financial investment product regulated by the Capital Markets Act,” the court stated.
  • Previous courts had used cautious terminology when discussing LUNA’s regulatory status.

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Terra’s native cryptocurrency, LUNC, was deemed not a security by the Seoul Southern District Court in a court case involving former Terraform Labs co-CEO Hyun-seong Shin.

Not Regulated by the Capital Markets Act

South Korean authorities are making headway in their regulatory classification of cryptocurrencies.

According to local news outlet Ilyo Shinmun, the Seoul Southern District Court is claiming that Terra’s native cryptocurrency, LUNC (formerly LUNA), should not be considered a security. “It is difficult to view Luna Coin as a financial investment product regulated by the Capital Markets Act,” the court stated in a case involving former Terraform Labs co-CEO Hyun-seong Shin.

Up until now, Southern District Courts had floated rather cautious terminology when discussing LUNA’s regulatory status, using phrases such “there is room for dispute in legal principles” and “it is questionable whether the Capital Market Act can be applied [to LUNA]”. Ilyo Shinmun, however, reports that the most recent decision uses an expression that 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 dismiss a confiscation request for Shin’s assets. Prosecution had initially requested to seize Shin’s property—most of which consists of real-estate spread out across South Korea—on the grounds that the property itself had been acquired thanks to criminal activity. The court had dismissed the request for confiscation by arguing that it was “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 agency lacked the jurisdiction to sue him. Kwon is currently 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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