{"id":19697,"date":"2023-06-07T21:12:48","date_gmt":"2023-06-08T01:12:48","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/crypto\/s-korean-court-set-to-decide-if-lunc-is-a-security\/"},"modified":"2023-06-07T21:12:50","modified_gmt":"2023-06-08T01:12:50","slug":"s-korean-court-set-to-decide-if-lunc-is-a-security","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=19697","title":{"rendered":"S Korean Court Set to Decide If LUNC Is a Security"},"content":{"rendered":"
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The trial of the Terraform Labs Co-founder Daniel Shin is set to begin in South Korea \u2013 with prosecutors determined to prove that Terra Classic (LUNC) is a security.<\/p>\n

Shin (Korean name Shin Hyun-seong) will face trial on fraud charges on June 10.<\/p>\n

And the media outlets Chosun Ilbo and EToday reported that legal experts are expecting a \u201cfierce\u201d battle in court.<\/p>\n

South Korean law currently does not classify any cryptoasset as a \u201csecurity.\u201d<\/p>\n

But the prosecution\u2019s case rests on proving that Shin knew LUNC (formerly LUNA) was a \u201csecurity\u201d when he sold tokens to investors.<\/p>\n

Shin has repeatedly said that he stepped away from the Terraform project two years after founding the company in Singapore.<\/p>\n

But video interviews with Shin just weeks before the crash appear to hint at an ongoing relationship between the Terra ecosystem and his own payments firm, Chai Corporation.<\/p>\n

Even if prosecutors succeed in convincing a district court that LUNC is a security, Shin\u2019s legal team has the right to pursue the matter at a second trial in the high court.<\/p>\n

And if this fails, the matter can be taken to the Supreme Court.<\/p>\n

Prosecution officials can also appeal verdicts, meaning the legal battle could drag on for months.<\/p>\n

But prosecutors are hopeful of victory.<\/p>\n

Should they succeed, they will hope to prosecute Shin\u2019s Terraform Co-founder Do Kwon on similar charges.<\/p>\n

Kwon is currently awaiting trial for allegedly traveling on forged documents in Montenegro.<\/p>\n

He was arrested along with Han Chang Joon, a senior executive at both Chai and Terraform.<\/p>\n

The duo was allegedly attempting to board a private plane at Podgorica Airport.<\/p>\n

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Kwon has stated that LUNC is \u201cnot a security\u201d and has complained that the case against him has become \u201cpoliticized.\u201d<\/p>\n

But prosecution officials have been attempting to secure his deportation to South Korea.<\/p>\n

Legal Challenges for Prosecutors \u2013 Will Shin Be Convicted?<\/h2>\n

Prosecutors have been fighting an uphill battle in their efforts to bring Shin to trial.<\/p>\n

Initial efforts to convince courts to issue him with an arrest warrant were rejected in December last year.<\/p>\n

Do Kwon (then in hiding) celebrated this ruling with apparent glee on Twitter.<\/p>\n

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But prosecutors returned with more attempts, after gathering evidence from Chai and raiding Shin\u2019s home.<\/p>\n

The issues did not stop there, however.<\/p>\n

The first trial date was initially set for May 26.<\/p>\n

But it was later revealed that the judge at the court was a former reporter for a newspaper who had interviewed Shin during the course of his work.<\/p>\n

The trial date was postponed, and the court was changed accordingly.<\/p>\n

How Will Prosecution Try to Prove LUNC Is a Security \u2013 And What Is at Stake?<\/h2>\n

The media outlets reported that both Shin and the prosecution have \u201crequested that experts submit written opinions on whether or not [LUNC] can be considered a security.\u201d<\/p>\n

An unnamed \u201ccapital markets\u201d expert who submitted their opinion to the prosecution was quoted as stating:<\/p>\n

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\u201cIt is reasonable to view both [LUNC] and [the USD-pegged stablecoin UST] as securities. But the prosecution is only trying to prove that this is the case with [LUNC] to increase the possibility of securing a positive outcome.\u201d<\/p>\n<\/blockquote>\n

Prosecutors think that they can prove Shin is guilty only on charges of fraud, breach of trust, and embezzlement.<\/p>\n

But the bone of contention is whether or not Shin violated the Capital Markets Act.<\/p>\n

This would require them to prove LUNC is indeed a security, as the Capital Markets Act does not currently contain many crypto-specific clauses.<\/p>\n

Chosun explained:<\/p>\n

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\u201cIt is only possible to apply the Capital Markets Act when it can be proved that coins [represent] securities investment contracts.\u201d<\/p>\n<\/blockquote>\n

Prosecutors are also hopeful that The US Securities and Exchanges Commission (SEC)\u2019s case against Terraform will help sway the court.<\/p>\n

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The SEC has called LUNC and Terra coins \u201ccryptoasset securities.\u201d<\/p>\n

It is also involved in a long legal battle that hinges on whether or not XRP is a security.<\/p>\n

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But Shin\u2019s team will hope the court considers a Seoul Southern District Court ruling from April this year, where a judge stated that LUNC could not be considered a security.<\/p>\n<\/p><\/div>\n