Key points to remember
- LUNA (now LUNC) should not be considered a security, according to the Seoul Southern District Court.
- “It is difficult to consider Luna Coin as a financial investment product regulated by capital markets law,” the court said.
- Previous courts have used careful terminology when considering LUNA’s regulatory status.
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Terra’s native cryptocurrency, LUNC, was not considered a security by Seoul’s 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 progress in their regulatory classification of cryptocurrencies.
According to local media Ilyo Shinmun, Seoul Southern District Court says 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 capital markets law,” the court said in a case involving former Terraform Labs co-CEO Hyun-seong Shin.
So far, Southern District Courts have used rather cautious terminology when considering LUNA’s regulatory status, using phrases such as “there is room for challenge to legal principles” and “there is doubtful that the Capital Market Law can be applied (to LUNA)”. Ilyo Shinmun, however, reports that the most recent ruling uses a phrase that flatly refutes the possibility of LUNA being regulated as a security.
The court also strongly rejected an appeal by prosecutors against an earlier decision to deny a request to confiscate Shin’s assets. The prosecution initially sought the seizure of Shin’s assets – most of which consist of real estate spread across South Korea – on the grounds that the assets themselves were acquired through criminal activity. The court had dismissed the forfeiture claim, arguing that it was “difficult to see that the property claimed (was) property acquired by crime or derived therefrom”.
Last Friday, Terra leader Do Kwon filed a request to dismiss charges brought against him by the U.S. Securities and Exchange Commission, arguing that the U.S. regulatory agency lacked jurisdiction to prosecute him. Kwon is currently being held in Montenegro, where he faces charges of falsifying documents. Both the United States and South Korea have expressed their intention to extradite him for prosecution.
Disclosure: At the time of writing this article, the author of this article owned BTC, ETH, and several other crypto assets.