Fayuan said it was difficult to consider Luna tokens as financial investment products regulated by the Capital Markets Act.
South Korea's local court dismissed security violation charges against former Terraform Labs CEO and co-founder Hyun-seong Shin. The court ruled that LUNA
LUNA (the native token of the LUNA ecosystem) is classified as a non-security under South Korea’s capital markets law.
The Southern Seoul District Court rejected the prosecutors’ appeal to seize Shin’s property and arrest him for securities law violations. According to a local daily, prosecutors argued that in addition to crimes involving property (fraud), Luna’s fraudulent transactions also violated the Capital Markets Act, making it possible to seize property.
A Google translated version of the law's opinion is as follows:
“It is difficult to consider Luna Coin as a financial investment product regulated by the Capital Markets Act.”
The court, while rejecting the prosecution's request to confiscate the defendant's property, noted that it was difficult to see that the claimed property was "the proceeds of crime or assets derived therefrom."
The latest ruling is more eye-catching because it explicitly states that Luna is not a security. Previously, other courts had used cautious wording such as "there is room for legal disputes" and "it is doubtful whether the Capital Markets Law can be applied."
The lawyer representing the former CEO said the court rejected prosecutors' request for arrest warrants for his client and individuals connected to the case. He added that Luna could not be easily considered an investment product based on the court's ruling.
The latest court ruling characterizes the Terra-LUNA incident as fraud and breach of trust rather than a violation of the Capital Markets Act. However, prosecutors are still focusing on the securities aspect of the native token and have appealed the lower local court’s decision to the Supreme Court.
The ruling by the South Korean local court is in stark contrast to the position of the U.S. Securities and Exchange Commission, which accused Terraform Labs and its founder Do Kwon of violating securities laws. However, Kwon's lawyers denied the SEC's securities fraud allegations.
