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, a local daily reported.
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 had been “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 said that the court rejected the prosecution’s requests for an arrest warrant for his client and individuals associated with this case. He added that Luna could not 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 judgment by the Korean district court is in contrast to the stance of the United States Securities and Exchange Commission, which has charged Terraform Labs and its founder, Do Kwon, with violation of securities law. However, Kwon’s lawyers have denied the SEC’s securities fraud allegations.