A South Korean district court has dismissed charges of security violations against former Terraform Labs CEO and co-founder Hyun-seong Shin. The court deemed LUNA (LUNA) (the native token of the LUNA ecosystem) as non-security under Korea’s Capital Markets Act.
The southern district court in Seoul dismissed the prosecution’s appeal for confiscating Shin’s properties and his arrest based on securities law violations. The prosecution argued that Luna’s fraudulent transactions breached Capital Market Act in addition to crimes involving property (fraud), making property confiscation a possibility, reported a local daily.
A google translated version of the court’s observation read:
“It is difficult to see Luna Coin as a financial investment product regulated by the Capital Markets Act.”
The court while rejecting the prosecution’s request for confiscation of the accused’s properties noted that it is difficult to see that the property subject to the claim is a “property acquired by a crime or an asset derived from it.”
The latest ruling is more notable because it states categorically that Luna is not a security. Other courts have previously used cautious language like “there is room for dispute in terms of the law” and “it is questionable whether the Capital Market Act can be applied.”
The lawyer representing the former CEO Shin said that the court rejected the prosecution’s requests for an arrest warrant against former CEO Shin and individuals associated with this case. He added that Luna cannot easily be considered an investment product based on the court ruling.
The latest court ruling makes the Terra-LUNA saga a case of fraud and breach of trust rather than a violation of the Capital Markets Act. However, the prosecution is still focusing on the securities aspect of the native token and has also appealed to the Supreme Court against the verdict of the lower district court.
The judgement by the Korean district court is in contrast to the United States Securities and Exchange Commission which has charged Terraform Labs and its founder Do Kwon for violation of securities law. However, Kwon’s lawyers have dismissed SEC’s securities fraud allegations.
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