Terraform Labs says South Korea's Luna case is 'highly politicized': WSJ

Quick Take

  • Terraform Labs believes South Korean prosecutors are overreaching their authority following the collapse of algorithmic stablecoin terraUSD (UST) and Terra’s native token, luna, the Wall Street Journal wrote. 
  • The company argued that luna was not a security in a statement shared with the financial news outlet.
  • A South Korean court reportedly issued an arrest warrant for Terraform Labs founder Do Kwon earlier this month.

Terraform Labs believes South Korean prosecutors are acting unfairly following the collapse of the stablecoin terraUSD (UST) and the digital asset luna, the company told the Wall Street Journal on Wednesday. 

“We believe that this case has become highly politicized, and that the actions of the Korean prosecutors demonstrate unfairness and a failure to uphold basic rights guaranteed under Korean law,” the company, which oversees the development of the Terra blockchain protocol, told the financial news outlet in a statement. 

A South Korean court reportedly issued an arrest warrant for Terraform Labs Do Kwon and two colleagues earlier this month, following the highly-publicized collapse of its algorithmic stablecoin UST and its associated token Luna in May. Terra lost its dollar peg and the value of luna plunged, contributing to losses totaling about $40 billion. 

Terraform Labs founder Do Kwon recently said on Twitter that he was "making zero effort to hide" following reports that Interpol had issued a red notice for his arrest. Singapore police issued a statement saying Kwon was not in its jurisdiction, Reuters reported on Sept. 17.

Terraform Labs argued the view that Luna was not legally classified as a security, and therefore South Korea's law regarding capital markets would not apply, the Wall Street Journal wrote. 

"We believe, as do most in industry, that Luna Classic is not, and has never been, a security, despite any changes in interpretation that Korean financial officials may have recently adopted,” a Terraform Labs’ spokesman told the Wall Street Journal, referring to efforts to revive the cryptocurrency. 


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