- South Korean prosecutors turn to the US Ripple ruling to strengthen their case against Terra-Luna.
- The recent US court decision on XRP provides a precedent on defining cryptocurrency as securities.
The Ripple Case as a Touchstone for Terra-Luna Investigations
In the aftermath of the staggering $40 billion collapse of Terra-Luna, the South Korean legal machinery is seeking to harness international jurisprudence. The Seoul Southern District Prosecutor’s Office has confirmed plans to utilize the US court’s judgment on the Ripple cryptocurrency as a tool in its investigations, particularly to establish Luna cryptocurrency’s status as financial securities.
To this end, the Prosecutor’s Office has procured a translated copy of the landmark ruling resulting from the lawsuit by the U.S. Securities and Exchange Commission against Ripple Labs. This decision pertains to Ripple Labs’ sale of XRP cryptocurrency, the details of which were relayed to the media outlet, Forkast, by a spokesperson from the Prosecutor’s Office.
In a groundbreaking judgment, the U.S. Court for the Southern District of New York clarified the contours of cryptocurrency regulations. On July 13, the court declared that the systematic sales of the XRP cryptocurrency by Ripple Labs were not tantamount to offering or selling financial securities. However, the court differentiated Ripple’s sales to institutions, labeling them as unregistered offers and sales of securities.
The Ripple Verdict’s Implications for Terra-Luna
This nuanced differentiation in the Ripple judgment is seen as a pivotal reference point for the Seoul prosecutors. Specifically, Dan Sung-han, who helms Seoul Southern District’s joint financial crimes team, pinpointed the latter segment of the verdict as instrumental. He believes it bolsters the case against Terra’s dispensation of Luna cryptocurrency, which he contends violates securities regulations. This stance was further elaborated in a recent piece by the Maeil Business News, a local media entity.
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In the eye of this storm are Terraform Labs’ co-founders Kwon Do-hyeong and Shin Hyun-seung. They find themselves ensnared in a web of accusations, including fraudulent activities and the unauthorized distribution of financial securities. Adding to the intrigue, Kwon was recently apprehended in Montenegro on grounds of allegedly using counterfeit passports.
His co-founder, Shin, alongside seven other former Terra associates, was subject to a preliminary hearing by a Seoul court on July 10. Notably, Kwon faces parallel accusations in the US, encompassing fraud and violations of securities law, stemming from the Terra-Luna debacle. Despite the maelstrom of charges, Kwon remains adamant, dismissing the allegations as baseless and conjecturing a political agenda behind them.
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