South Korean prosecutors’ team has started a new investigation and review on Terra tokens to categorize them under securities. TerraForm Labs, its founder Do Kwon, and other affiliates will also be charged with violating the Capital Market Act if Terra tokens LUNA, LUNC, and UST (now USTC) are found to be securities.
Prosecutors Investigate Whether Terra Comes Under Securities
The Seoul Southern District Prosecutors Office’s Financial and Securities Crime Joint Investigation Team met with experts from crypto exchanges and financial regulators including Financial Supervisory Service to determine if Terra tokens are securities, reported the Korea Herald on September 13.
The move will also accuse TerraForm Labs, Do Kwon, and other affiliates of violating the Capital Markets Act. Currently, Terra and its executives are under scrutiny for fraud and tax evasion allegations.
The prosecutors investigating the collapse of LUNA (now LUNC) and UST (now USTC), may charge the defendants with Capital Markets Act violations irrespective of the financial authorities’ judgment. Moreover, the prosecutors’ decision would also help lawmakers in the upcoming crypto regulation.
Financial regulators are working to categorize cryptocurrencies into securities and non-securities. However, some experts believe crypto are securities as they can be issued like stocks, while others consider crypto as a commodity due to their decentralized properties.
The U.S. Securities and Exchange Commission (SEC) is also investigating LUNA developer Terraform Labs. Terra’s decentralized finance platform Mirror Protocol is under investigation for selling mirrored assets of US stocks in UST.
LUNA and LUNC Skyrockets Amid Community Support
While South Korean authorities investigate fraud and other allegations against Terra, LUNC and LUNA tokens jumped over 200% last week. Both tokens saw over $3.5 billion daily trading volume.
Terra Classic (LUNC) price made a high of $0.00058. Currently, it is trading at $0.00037, down nearly 2% in the last 24 hours. The rally comes amid support for the 1.2% tax burn and staking of LUNC tokens.
Meanwhile, Terra (LUNA) price jumped to a high of $7.06. At the time of writing, the price has plummeted to $4.52.