Terra-Luna Collapse: South Korean Prosecutors Leverage Ripple XRP Verdict in Securities Classification

South Korean prosecutors investigating the Terra-Luna collapse of last year, valued at US$40 billion, are seeking to present the recent U.S. verdict on Ripple cryptocurrency to a Seoul court as evidence of Luna cryptocurrency being classified as financial securities. The translated version of the U.S. Securities and Exchange Commission’s (SEC) lawsuit outcome against Ripple Labs regarding the sale of XRP cryptocurrency has been received by the Seoul Southern District Prosecutor’s Office.

With the intention of demonstrating Terraform Labs’ Luna cryptocurrency as financial securities, prosecutors in Seoul are planning to submit the XRP ruling to a local court. Terraform Labs’ co-founders, Kwon Do-hyeong and Shin Hyun-seung, are facing a range of charges, including fraud and unregistered offerings of financial securities.

Also See: Analyzing XRP’s Recent Decline: Insights from Prominent Trader Michaël van de Poppe

In a decision handed down by the U.S. Court for the Southern District of New York on July 13, it was determined that Ripple Labs’ programmatic sales of XRP did not meet the criteria for the offer and sale of financial securities. However, the court did find that Ripple’s institutional sales of XRP constituted an unregistered offer and sale of securities.

Dan Sung-han, director of the Seoul Southern District’s joint financial crimes team, noted that the latter aspect of the ruling could be used to support the assertion that Terra’s offerings of Luna cryptocurrency violated securities regulations. This insight was shared in a report by local news outlet Maeil Business News on Monday.

Meanwhile, one of Terra’s co-founders, Kwon, is currently detained in Montenegro for attempting to travel with forged passports. A preliminary hearing was held in a Seoul court on July 10 for Shin and seven former Terra employees.

Kwon is also wanted in the U.S. on similar charges of fraud, violations of securities law, and other related matters linked to the Terra collapse. He maintains that the allegations against him lack merit and are driven by political motives.