Regulators all across the world have been looking into Terraform Labs, Founder Do Kwon, and other linked parties. Terra [LUNA] and its native stablecoin UST lost the majority of their value earlier this year, leading in significant losses for investors. The same thing happened in the larger ecosystem, and the market as a whole got turbulent.
According to the most recent news, South Korean officials have issued a warrant for Do Known’s arrest, signaling that the Terra founder would be apprehended. “The court in Seoul issued a warrant for Do Kwon and five others, according to a text message from the prosecutor’s office,” according to a recent Bloomberg story.
Terra infringing on the Capital Markets Act
It’s worth noting that a recent local news outlet claimed that South Korean officials were looking into whether the Terra ecosystems had security features. Notably, the Terra investigation team of the Seoul Southern District Prosecutors’ Office was assessing Luna’s securities properties by referencing to cases from other countries.
Prosecutors were reportedly listening to different points of view by summoning virtual asset experts as well as financial authorities such as the Financial Supervisory Service as reference persons.
They stated yesterday that if the prosecution determines that Luna and Terra have securities properties, they could face charges under the Capital Market Act for unfair trade, such as market price manipulation. Bloomberg confirmed the cause for the warrant issuance, saying,
“A local media previously indicated that the warrant was related to a capital market rule breach.”
According to Woori Law Firm’s Kim Jeong-Cheol,
“Because virtual assets are not now recognized as securities, the Capital Market Act does not apply.” In a circumstance where the conversation has advanced significantly, there is a strong potential that the Luna-Tera case will become Korea’s ‘leading case,’ regardless of the charges indicted.”
In addition, Kim Dong-hwan, Director of blockchain advising business Blitz Labs, stated,
“In 2018, the investigating authorities merely looked at Coinone’s margin trading charges, but nothing has happened since then.” As a result, if the authorities look into it, it will surely have a crippling effect.” Until now, it appeared that financial authorities were taking a cautious approach with Terra and its boss, but the issuing of the current arrest warrant suggests otherwise.
