A district court in South Korea has ruled that the native token of the LUNA ecosystem, LUNA, is not a security under Korea’s Capital Markets Act.
The court dismissed charges of security violations against Hyun-Seong Shin, co-founder of Terraform Labs, stating that it is “difficult to see Luna Coin as a financial investment product regulated by the Capital Markets Act.”
This ruling makes the Terra-LUNA saga a case of fraud and breach of trust rather than a violation of securities law.
However, the prosecution is still focused on the securities aspect of the native token and has appealed to the Supreme Court against the verdict of the lower district court.
The latest ruling is significant because it states unequivocally that LUNA is not a security, which contrasts with the stance of the United States Securities and Exchange Commission.
The SEC has charged Terraform Labs and its founder, Do Kwon, with violating securities law. Kwon’s lawyers have denied the SEC’s securities fraud allegations.
Shin’s lawyer said that the court’s decision rejected the prosecution’s requests for an arrest warrant for his client and other individuals associated with this case.
He added that Luna could not be considered an investment product based on the court’s ruling. The court also noted that it is challenging to see that the property subject to the claim had been “acquired by a crime or an asset derived from it.”