South Korea Supreme Court Ruling on TerraUSD and LUNA

South Korea’s Supreme Court has sided with lower courts, ruling that TerraUSD (USTC) and its sibling LUNA do not qualify as financial investment products.

Korea’s Supreme Court upheld earlier decisions, rejecting the prosecution’s appeal. Reports from Korean newspaper Etoday indicate that on January 23, the court denied prosecutors’ requests to seize assets from Terraform Labs co-founder Shin Hyun-seong. The court agreed with lower courts, determining that LUNA does not qualify as a regulated financial product under Korea’s Capital Markets Act, stating, “related law and records show the lower court’s decision is valid.”

Prosecutors argued that LUNA should be considered a security and attempted to confiscate Shin’s assets, alleging he accrued illegal profits. However, courts have consistently ruled that LUNA fails to meet the legal definitions of a security or financial investment product.

Capital Markets Act Non-Applicability

Lawyer Kim Jung-chul of Law Firm Woori expressed that the ruling not only dismisses LUNA’s security status but also confirms that the Capital Markets Act does not apply, meaning asset seizure under that law is not feasible.

Despite this ruling, Shin and other Terraform executives still face fraud charges, with prosecutors claiming they misled investors and engaged in market manipulation for profits from the Terra blockchain. Do Kwon, the leading figure behind Terra, was extradited from Montenegro and appeared in a Manhattan court on federal fraud charges in January. A U.S. grand jury indicted Kwon for inflating crypto prices and laundering funds. The collapse of Terra in May 2022 led to over $40 billion in losses for investors globally.

Read more: LUNC price rises as total Terra Classic nears a 403B milestone