Korean Supreme Court rules TerraUSD and LUNA are not financial products
The Supreme Court of Korea ruled that TerraUSD and LUNA are not financial investment products, dismissing the prosecution’s appeal.
According to CryptoNews, citing the Korean publication Etoday, the Supreme Court of Korea rejected the prosecution's appeal and upheld lower court rulings stating that the collapsed stablecoin TerraUSD and its related token LUNA do not meet the criteria of financial investment products. As a result, they are not subject to regulation as financial products under Korea's Capital Markets Act.
Based on this, the prosecution attempted to seize the assets of one of Terraform Labs’ executives, Shin, arguing that LUNA was a type of security and that Shin had made illegal profits. However, courts have repeatedly ruled that LUNA does not meet the legal definition of a security or financial investment product.
The Capital Markets Act does not apply
Attorney Kim Jung Chul from the law firm Woori stated that the Supreme Court’s ruling not only nullifies LUNA’s status as a security but also "confirms that the Capital Markets Act does not apply, meaning asset seizures under this law are impossible."
Despite the ruling, Shin and other Terraform executives still face fraud charges. Prosecutors claim they misled investors and manipulated the market to profit from the Terra blockchain.
Do Kwon, the key figure behind Terra, was extradited from Montenegro and appeared before a Manhattan court in January on federal fraud charges. A U.S. grand jury indicted Kwon for inflating the prices of Terraform cryptocurrencies and money laundering. The collapse of Terra in May 2022 wiped out over $40 billion, leading to significant losses for investors worldwide.
As we wrote, following his extradition to the U.S., Terraform Labs co-founder Do Kwon pleaded not guilty to multiple fraud charges during a hearing at a Manhattan federal court. The charges stem from the $40 billion collapse of digital assets TerraUSD and Luna in 2022.
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