CJ - Cryptocurrency Enthusiast
The former CEO and co-founder of Terraform Labs, Hyun-seong Shin, has been cleared of security violation charges by a South Korean district court. The court ruled that LUNA, the native token of the LUNA ecosystem, is not a security under Korea's Capital Markets Act. In addition to property offences, the prosecution claimed that Luna's fraudulent transactions violated the Capital Market Act. The Terra-LUNA incident is now categorised as a matter of fraud and breach of trust rather than a violation of the Capital Markets Act by the most recent court decision.
The prosecution's request for the confiscation of Shin's assets and his detention due to violations of the securities laws was denied by the court. The judgement is significant because, in contrast to the position taken by the United States Securities and Exchange Commission, it establishes unequivocally that Luna is not a security. The court stated that it was challenging to determine whether the claimed property had been "acquired by a crime or an asset derived from it." According to the former CEO's attorney, the prosecution's request for an arrest warrant for his client and other parties involved in this case was denied by the court.
While the prosecution is still focusing on the securities aspect of the native token and has appealed to the Supreme Court against the verdict of the lower district court, the latest court ruling makes it clear that Luna could not easily be considered a crypto market investment product. The ruling is significant for the cryptocurrency trading industry in South Korea as it provides clarity on the classification of digital crypto assets under the country's securities law. The court's decision will likely impact future regulatory actions taken by the government, regulators and the South Korean cryptocurrency investment industry.