The South Korean lawsuit alleging that LUNA Classic (LUNC), the new version of Terra LUNA that crashed in 2022, violated securities laws has concluded.
Is LUNA Classic (LUNC) a security: South Korean court rules
The Terra network’s new project, rebranded as Terra Luna Classic (LUNC), is catching the attention of global regulators following last year’s collapse. The detention of founder Do Kwon points to new investigations to be opened.
However, remarks by SEC Chairman Gary Gensler before the US House of Representatives Financial Services Committee have sparked new debates over whether cryptocurrencies should be traded as securities or commodities. A hot development in this regard was the outcome of a South Korean lawsuit alleging that LUNC is a security…
According to Korean media ilyo, South Korea’s Seoul Southern District Court rejected the prosecution’s claim that Luna Coin is a security. In most of the previous trials of South Korean courts, cryptocurrencies were not considered securities and could not be regarded as financial…
— Wu Blockchain (@WuBlockchain) April 24, 2023
According to local sources, a South Korean district court dismissed the allegations that LUNC was a security. The trial judge pointed out that there was no substantial evidence that LUNC had violated the Securities and Exchange Act.
The decision is a bold move for the South Korean government, which is currently prosecuting Do Kwon for fraud through crypto and blockchain technology. Previously, other South Korean courts have ruled that cryptocurrencies are not securities, although there is room for debate over the interpretation of the law.
“LUNA is not a security”
While rejecting the prosecution’s request for the seizure of the defendants’ property, the court noted that it was difficult to understand whether the property subject to the claim was “obtained with a crime or with an asset obtained from it”.
The last decision is more noteworthy because it categorically states that Luna is not a security. Other courts had previously used cautious language such as “there is room for disagreement from the point of view of law” and “it is doubtful whether the Capital Market Law can be applied”.
Meanwhile, Do Kwon’s lawyer said that the court denied the prosecution’s request for the arrest of his client and people linked to this case. He added that according to the court decision, Luna cannot be easily considered as an investment product.
A Google translated version of the court’s observation states: “It is difficult to view Luna Coin as a financial investment product regulated by the Securities and Exchange Act.”
What does the development mean for LUNA Classic (LUNC) investors?
The latest court ruling turns the Terra-LUNA saga into a case of fraud and breach of trust rather than a breach of the Capital Markets Law. However, the prosecution still focuses on the securities aspect of LUNC and has also appealed to the Supreme Court against the lower district court’s decision.
The Korean district court’s decision contradicts the SEC’s stance, which accused Terraform Labs and its founder, Do Kwon, of violating securities law. However, Kwon’s lawyers denied the SEC’s allegations of securities fraud.
How did the LUNC price react to the outcome of the lawsuit?
LUNA Classic (LUNC), ranked 68th by market capitalization, failed to react upwards to the positive case news. The price is trading at $0.00011, down 2.5% at the time of writing. As Kriptokoin.com, we have included the important developments of the week of April 24, which started with a decline, in this article.
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