Terraform Says Case Against Do Kwon Is ‘Politicized’ and LUNC ‘Isn’t a Security’

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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

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Do Kwon, the under-fire CEO of Terraform Labs, has hit out at South Korean prosecutors via his firm. The company has accused prosecutors of morphing the legal definition of a security to kowtow to political pressures.

A spokesperson for Terraform told The Wall Street Journal that the firm “believes” that the case against Kwon and five fellow executives “has become highly politicized.” Yesterday, Kwon’s Terraform co-founder Daniel Shin was issued with a summons by the South Korean National Assembly.

Terraform explained:

“The actions of the Korean prosecutors demonstrate unfairness and a failure to uphold basic rights guaranteed under Korean law. We believe, as do most in the industry, that Terra Luna Classic is not, and has never been, a security, despite any changes in interpretation that Korean financial officials may have recently adopted.”

Lawyers in South Korea have made similar assertions. The prosecution has asserted that Terra Luna Classic (LUNC) was sold as an “unregistered security” – making Kwon’s actions in promoting the coin a breach of the Capital Market Act. But the biggest sticking point in this is that South Korean law does not consider cryptoassets to be securities.

Prosecutors believe they have found a way around this, however. The regulatory Financial Supervisory Service has told the prosecution that it is prepared to classify some coins as securities – and cited comments from American regulators as evidence that cryptoassets can be deemed to have the properties of a security in some cases.

Terraform appears to believe that the prosecution will struggle to convince courts that LUNC is a security.

However, the spokesperson would not comment on Kwon’s whereabouts. Kwon has claimed that he is “not on the run” on Twitter – despite the fact that Interpol has issued a Red Notice for his arrest. South Korean prosecutors have also issued an arrest warrant – and the nation’s foreign ministry is voiding his passport.

Do Kwon: ‘Misinformation Is Being Spread’

The spokesperson was quoted as stating that “the whereabouts of CEO Kwon and his family cannot be disclosed because it is a private matter,” Chosun reported.

Yesterday, Kwon took to Twitter to decry the “amount of misinformation” that was being “spread” about him – and denied that he had “cashed out” his bitcoin (BTC) holdings the day after prosecutors served with an arrest warrant.