Key Notes

Key Notes:

South Korea’s Supreme Court has ruled that Terra’s UST and LUNA are not securities, dismissing prosecutors’ attempts to seize Terraform Labs executives’ assets.The ruling, delivered by Chief Justice Oh Seok-jun, denied prosecutors’ request to seize assets belonging to Terraform Labs co-founder Shin Hyun-seong.Despite the ruling, Terraform Labs executives still face fraud charges related to alleged market manipulation and investor deception.

South Korea’s Supreme Court has ruled that TerraUSD (UST) and LUNA do not qualify as securities under the country’s Capital Markets Act, marking a crucial legal precedent in the ongoing case against Terraform Lab and it’s executives. This was revealed in a local news report on Wednesday. The verdict was delivered by Chief Justice Oh Seok-jun of the 3rd Division of the Supreme Court.

The ruling stemmed from an appeal filed by prosecutors in January seeking to classify the algorithmic stablecoin UST and LUNA LUNA $0.26 24h volatility: 4.0% Market cap: $176.04 M Vol. 24h: $17.13 M as securities in order to confiscate assets belonging to Terraform Labs co-founder Shin Hyun-Seong.

However, the case took a different turn when Chief Justice Oh Seok-jun sided with the defendants, dismissing the seizure and preservation request for Hyun-Seong on the basis that the digital assets do not qualify as securities.

The ruling reaffirmed previous court decisions that LUNA does not meet the criteria of a financial investment product under the Capital Markets Act.

Prosecutors had argued that LUNA functioned as securities and that Shin and other Terraform executives had made illicit gains by misleading investors. However, the court dismissed these claims, stating that legal and financial records clearly support the classification of UST and LUNA as non-securities.

Speaking on the latest development, attorney Kim Jung-Chul of Law Firm Woori said the court’s decision might have future implications on how virtual assets should be classified in South Korea.

“Since the violation of the Capital Market Act is not acknowledged, this means that the confiscation and collection due to the violation of the Capital Market Act cannot be carried out, and It is likely that this will also have an impact on lower courts regarding the securities nature of virtual assets in the future,” he said.

Despite the Supreme Court’s decision, Terraform Labs executives, including Shin, still face fraud-related charges linked to allegations of market manipulation and investor deception.

Meanwhile, the ruling comes nearly three years after the catastrophic collapse of the Terra ecosystem, which played a pivotal role in shaping global regulatory scrutiny of stablecoins and algorithmic tokens.

At its peak, Terra’s algorithmic stablecoin UST and its sister token LUNA were key players in the crypto market, with a combined valuation exceeding $40 billion.

However, a catastrophic de-pegging event led to the complete breakdown of the Terra ecosystem, triggering one of the most devastating crashes in crypto history.

UST, which was designed to maintain a 1:1 peg to the US dollar, lost its stability due to a flawed algorithmic mechanism. This caused a massive sell-off, leading to LUNA’s hyperinflation and eventual collapse. Investors, both retail and institutional, suffered billions in losses, leading to widespread scrutiny from regulators worldwide.

Following the collapse, Terraform Labs co-founder Do Kwon became one of the most wanted figures in the crypto world. Interpol issued a Red Notice against him, leading to his arrest in Montenegro in March 2023. He was later extradited to the United States, where he faced fraud charges in a Manhattan court.

A US grand jury indicted Kwon on multiple counts, including securities fraud, wire fraud, and market manipulation, accusing him of inflating Terraform’s token prices and laundering funds. However, the disgraced crypto boss recently pleaded not guilty to the charges.

Meanwhile, South Korean authorities have also sought his extradition, aiming to hold him accountable for the financial devastation caused by Terra’s collapse.

Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.

Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.

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