Is LUNA a Security? South Korean Prosecutors Want to Know the Answer

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 26, 2023 06:55 EDT

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South Korean prosecutors are looking into whether Terra Luna Classic or LUNC (formerly LUNA) can be considered a security – as they continue their probe into Terraform Labs and Terra ecosystem coins.

According to The Financial News, the Seoul Southern District Prosecutors’ Office’s joint financial and securities crime investigation team has announced that it is currently “reviewing the matter” and earlier today issued an arrest warrant for Do Kwon, the Terraform co-founder and CEO.

Prosecutors said that they will be “listening to the opinions” of financial regulators such as the Financial Supervisory Service. They will also be “summoning cryptoasset experts” to provide “evidence” as part of their investigation.

The tokens crashed in early May, with the South Korean government responding by authorizing a number of probes into Terraform and its masterminds. Some victims have alleged that they were misled by Kwon, while others allege that Kwon and company executives may have engineered the crash.

Multiple companies with links to Terraform have already been raided as part of the investigation and prosecutors have issued five other arrest warrants. They have also suggested that they may seek the help of Interpol in their efforts to arrest Kwon.

If the prosecution has deemed that LUNC and Terra ecosystem coins have securities-like properties, Kwon and others could be prosecuted under the terms of the Capital Market Act. Prosecutors believe that if LUNC is indeed a security, Kwon and Terraform executives could be charged with manipulating market prices.

Is LUNC a Security? Why it Matters for Prosecutors

Legal experts have pointed out that it may be difficult for both prosecutors and civil court lawyers to make any charges against Kwon and Terraform stick.

Presently, there are no laws that specifically regulate the way crypto is marketed in South Korea. Investigators have been looking into possible fraud violations under the terms of laws that govern economic crimes. But finding solid evidence of violations of this nature may prove tricky, legal experts have previously claimed.

However, if prosecutors now think they can prove LUNC has “securities-like” properties, they – and lawyers representing groups of victims – may have finally found firm ground on which they think they can wage legal battle against Kwon and Terraform.