It is challenging to consider the Luna token as a financial investment instrument covered by the Capital Markets Act, according to the court.
Former Terraform Labs CEO and co-founder Hyun-seong Shin was accused of violating security, but the accusations were dropped by a South Korean district court. According to Korea’s Capital Markets Act, the court determined that LUNA (the native token of the LUNA ecosystem) is not a security.
In Seoul, the southern district court rejected the prosecution’s appeal on the confiscation of Shin’s assets and his arrest due to alleged violations of the securities laws. According to a local daily, the prosecution claimed that Luna’s unlawful transactions breached both the Capital Market Act and crimes affecting the property (fraud), making property confiscation a possibility.
According to a Google translation of the court’s observation,
It is challenging to consider Luna Coin as a financial investment product subject to Capital Markets Act regulation.
While rejecting the prosecution’s request to seize the assets of the accused, the court made note that it is challenging to determine whether the claimed property was “acquired by a crime or an asset derived from it.”
The most recent ruling is more significant since it clearly establishes that Luna is not a security. In the past, other courts have expressed themselves with caution, saying things like “there is room for dispute in terms of the law” and “it is questionable whether the Capital Market Act can be applied.”
The prosecution’s petitions for an arrest warrant for his client and other people connected to this issue, according to the attorney for the former CEO, were denied by the court. He continued by saying that, in light of the court’s decision, Luna could not simply be considered an investment product.
According to the most recent court ruling, the Terra-LUNA affair has become an example of fraud and breach of trust rather than a violation of the Capital Markets Act. The prosecution, however, continues to focus on the native token’s securities component and has also appealed the lower district court’s decision to the Supreme Court.
The United States Securities and Exchange Commission, which has accused Terraform Labs and its founder, Do Kwon, of breaking securities legislation, disagrees with the Korean district court’s ruling. The SEC’s claims of securities fraud, however, have been denied by Kwon’s lawyers.