South Korean authorities start investigating the status of LUNC tokens

Law enforcement could charge TFL, Do Kwon and other affiliates with violating the Capital Market Act

13.09.2022 - 14:20

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2 min

What’s new? A joint investigation team of the Seoul Southern District Prosecutor's Office Financial and Securities Crimes Investigation has met with experts from cryptocurrency exchanges and financial regulators, including the Financial Supervisory Service, to determine whether Terra Classic (LUNC) tokens are securities. Law enforcement could charge Terraform Labs (TFL), its founder Do Kwon and other affiliates with violating the Capital Market Act. The company and its executives are currently under scrutiny over allegations of fraud and tax evasion, the Korea Herald reported.

Information on the Korea Herald website

What are the experts' actions? Prosecutors investigating the collapse of the Terra ecosystem can bring charges of violating the Capital Market Act regardless of the decision of the financial authorities. The latter are working to separate cryptocurrencies into securities and non-securities. However, some experts believe that all cryptocurrencies are securities because they can be issued like stocks. Others believe that because of their decentralized properties, digital assets are more consistent with the concept of a commodity rather than a security.

The US Securities and Exchange Commission (SEC) is also investigating TFL. Mirror Protocol, a decentralized financial platform on the Terra blockchain, is under investigation for selling tokenized US shares in UST stablecoins.

What is the situation with the tokens? While South Korean authorities are investigating fraud and other charges against TFL, LUNC and Terra (LUNA) tokens jumped 200% last week. As of September 13 at 13:40 UTC, LUNC is trading at $0,0003531, having lost 8,07% in 24 hours, according to Binance. LUNA is trading at $4,1057, down 13,31%.

In July, authorities in South Korea and the US jointly discussed investigations into Terra. The countries are simultaneously investigating TFL for fraud and trading in unregistered securities.

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