A spokesperson for the company behind Terra said it believes prosecutors heeled to public pressure and expanded the definition of security after its associated cryptocurrencies collapsed.
Terraform Labs, the company behind the growth of the Terra (LUNA) blockchain said South Korea’s case against its co-founder Do Kwon has become political, claiming prosecutors expanded the definition of security in response to public pressure.
“We believe that this case has become highly politicized and that the actions of the Korean prosecutors demonstrate unfairness and a failure to uphold basic rights guaranteed under Korean law,” a Terraform Labs spokesman stated in The Wall Street Journal on Sept. 28.
South Korean prosecuting attorney issued an arrest warrant for Kwon on Sept. 14 for violations of the country’s capital markets laws, but Terraform Labs laid out a defense disagreeing Terra (now known as Terra Luna Classic (LUNC)) isn’t legally security, meaning it isn’t enclosed by capital markets laws.
The spokesman alleged prosecutors of mounting the definition of a security due to intense public pressure from the collapse of Terra and its connected algorithmic stablecoin TerraUSD (UST), now known as TerraClassicUSD (USTC).
“We believe, as do most in industry, that Luna Classic is not, and has never been, a security, despite any changes in interpretation that Korean financial officials may have recently adopted.”
The disagreement by Terraform Labs stems from the unclear regulatory status of cryptocurrencies and the companies that generate and issue them.
Presently, capital market and electronic securities’ systems in the country don’t comprise a legal definition of non-standardized securities issued through a blockchain.
The country is moving to regulate the space with its financial regulator, the Financial Services Commission (FSC) preparing guidelines for security tokens by the end of 2022.
A seeped government report in May further exposed South Korea’s plans to roll out a crypto framework by.
Kwon’s whereabouts remain unknown and Terraform Labs did not comment on his location mentioning physical security risks, but Kwon says he’s not making an effort to hide even after a notice was sent to global authorities by Interpol.
Leave a Reply