South Korean prosecutors investigating the collapse of Terra-Luna, a cryptocurrency project that lost $40 billion last year, are turning to the recent U.S. ruling on Ripple cryptocurrency to support their case. The Seoul Southern District Prosecutor’s Office has confirmed that they plan to submit the ruling to a Seoul court in order to establish that the Luna cryptocurrency should be considered financial securities.
The Seoul prosecutors recently received a translated version of the ruling on the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Ripple Labs. The lawsuit focused on the sale of XRP, Ripple’s cryptocurrency. According to a spokesperson from the Prosecutor’s Office, they intend to use this ruling as evidence to prove that Terraform Labs’ Luna cryptocurrency should be deemed financial securities. The co-founders of Terraform Labs, Kwon Do-hyeong and Shin Hyun-seung, are facing multiple charges including fraud and unregistered offerings of financial securities.
On July 13, the U.S. Court for the Southern District of New York made a ruling in favor of Ripple Labs. The court determined that Ripple’s programmatic sales of XRP did not meet the criteria for the offer and sale of financial securities. However, the court also concluded that Ripple’s institutional sales of XRP constituted the unregistered offer and sale of securities.
The director of the Seoul Southern District’s joint financial crimes team, Dan Sung-han, sees potential in the latter part of the U.S. ruling to support the prosecutors’ case against Terraform Labs. He believes that the ruling can be used to demonstrate that Terra’s offerings of the Luna cryptocurrency violate securities regulations. This assertion was reported by local news outlet Maeil Business News.
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Meanwhile, Kwon Do-hyeong, one of the co-founders of Terraform Labs, is currently detained in Montenegro for attempting to travel with forged passports. In addition to the legal troubles he faces in South Korea, Kwon is also wanted in the United States on similar charges of fraud and securities law violations related to the collapse of Terra-Luna. He has maintained that these charges are baseless and politically motivated.
In the recent preliminary hearing held on July 10 in Seoul, Shin Hyun-seung along with seven former Terra employees appeared before a court. The hearing marked a significant step in the legal proceedings against them.
The involvement of cryptocurrency in legal cases and its classification as financial securities has become a topic of great interest and concern worldwide. The outcome of the Ripple SEC lawsuit in the United States has had ripple effects (pun intended), prompting authorities in other countries to consider the implications for their own regulatory frameworks. South Korean prosecutors are now using the ruling as a precedent to strengthen their case against Terra-Luna.
This development also sheds light on the growing efforts of the South Korean authorities to tackle cryptocurrency-related crimes. The Seoul prosecutors have established a dedicated team to investigate such crimes, specifically focusing on Do Kwon, the co-founder of Terra-Luna. It signifies the importance of the case and the determination of the authorities to bring those responsible to justice.
It remains crucial to closely observe how this particular legal battle will unfold and the wider implications it may have on the cryptocurrency industry. As governments and regulators seek to navigate the complexities of the digital asset space, cases like this will continue to shape the legal landscape and establish precedents for future cryptocurrency-related disputes.
