Do Kwon seeks SEC charges dismissal as S.Korea rules LUNA a non-security

The South Korean district court recently dismissed security violation charges against Terra co-founder Hyun-seong Shin, deeming LUNA a non-security under Korea’s Capital Markets Act.

Court documents were filed indicating that Do Kwon, co-founder and CEO of Terraform Labs, has asked for the dismissal of charges leveled against him by the Securities and Exchange Commission (SEC). 

In the motion filed on April 21 to have the SEC charges dismissed, Kwon argues the SEC’s claims are invalid, pushing back against the agency’s position that tokens including Mirror Protocol (MIR), Terra Classic (LUNC) and TerraUSD Classic (USTC) are securities.

Additionally, Kwon’s counsel says the agency lacked the proper jurisdiction to bring charges against Kwon and Terraform Labs because Terra's tokens and projects were “aimed at the world” and did not specifically target United States investors.

 A South Korean district court recently dismissed security violation charges against the co-founder of Terraform Labs, Hyun-seong Shin, deeming LUNC a non-security under Korea’s Capital Markets Act. This ruling supports Kwon's motion only with regard to LUNC.

However, in a press conference after the Seoul Southern District Prosecutor’s office indicted 10 people involved in the collapse of the Terra stablecoin ecosystem, the prosecutor reportedly identified Sygnum as the Swiss bank where Kwon transferred more than 10,000 Bitcoin (BTC) from the Terra platform and the Luna Foundation Guard (LFG) to a cold wallet, then converted it to fiat.

The Financial and Securities Crime Joint Investigation Unit of the Seoul Southern District prosecutor’s office, headed by Dan Sung-han, stated that it is monitoring Bitcoin owned by the LFG and that the transferred amount, which aligns with the SEC complaint, is approximately $100 million.

The prosecutors clarified that the $100 million was not kept solely in the Sygnum account and was dispersed in various locations. It was verified that a portion of the funds was transferred to the Kim & Chang law firm account to cover legal fees, while the rest amounted to millions of dollars.

Related: Terraform Labs co-founder and nine others indicted in South Korea

The SEC’s actions against Kwon and the company he co-founded preempted his arrest in Montenegro, where he currently faces extradition. South Korean authorities issued an arrest warrant for Kwon in September, and U.S. federal prosecutors unveiled criminal charges against him shortly after he was arrested a month ago.

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