South Korea Supreme Court Rules TerraUSD and LUNA Are Not Securities
South Korea's Supreme Court ruled that TerraUSD (UST) and LUNA do not qualify as securities under the Capital Markets Act. This decision is significant for the ongoing case against Terraform Labs and its executives.
Key Points of the Supreme Court's Decision
- The ruling came after prosecutors appealed to classify UST and LUNA as securities to confiscate assets from co-founder Shin Hyun-Seong.
- The court dismissed the request for asset seizure, asserting that these digital assets are not securities.
- This ruling reinforces earlier court decisions stating LUNA does not meet criteria for financial investment products.
- The court rejected claims of illicit gains by Terraform executives from misleading investors.
- Legal expert Kim Jung-Chul noted potential implications for future classifications of virtual assets in South Korea.
Despite the ruling, Terraform Labs executives still face fraud-related charges linked to market manipulation and investor deception.
The Terra Ecosystem Collapse
The ruling follows nearly three years after the collapse of the Terra ecosystem, which had a combined valuation over $40 billion at its peak. The failure was due to a de-pegging event of UST, leading to massive losses for investors and increased regulatory scrutiny globally.
Co-founder Do Kwon became a wanted figure post-collapse, was arrested in Montenegro, and extradited to the US facing multiple fraud charges, including securities fraud. He has pleaded not guilty while South Korean authorities seek his extradition for accountability regarding Terra's financial fallout.