- The prosecutors are looking into the collapse of LUNA (now LUNC) and UST (now USTC).
- The judgement by prosecutors would aid legislators in the next crypto legislation.
Prosecutors in South Korea have initiated a fresh probe and evaluation of Terra tokens to determine whether or not they qualify as securities. If Terra tokens LUNA, LUNC, and UST (formerly USTC) are determined to be securities, then TerraForm Labs, its creator Do Kwon, and other affiliates will also be prosecuted for breaking the Capital Market Act.
According to the Korea Herald, the Seoul Southern District Prosecutors Office’s Financial and Securities Crime Joint Investigation Team met with crypto exchange specialists and financial authorities such as the Financial Supervisory Service on September 13 to evaluate whether Terra tokens are securities.
Securities or Non-Securities?
Also implicated in the action are TerraForm Labs, Do Kwon. Along with other affiliates for alleged violations of the Capital Markets Act. There have been claims made against Terra and its management, including possible fraud and tax evasion.
Regardless of the verdict of the financial authorities. The prosecutors looking into the collapse of LUNA (now LUNC) and UST (now USTC) may prosecute the defendants with breaches of the Capital Markets Act. Furthermore, the judgement by prosecutors would aid legislators in the next crypto legislation.
Cryptocurrencies are now being sorted by financial authorities into two broad categories: securities and non-securities. Some analysts classify cryptocurrencies as securities. Since they may be issued much like stocks, while others classify them as commodities because of their decentralized nature.
Furthermore, Terraform Labs, the company responsible for LUNA, is being looked at by the U.S. Securities and Exchange Commission (SEC). It has been brought to light that Mirror Protocol, a decentralized financial platform developed by Terra, has been peddling mirrored assets of US equities in UST.
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