A team of South Korean prosecutors has launched a new inquiry and evaluation of Terra tokens in order to classify them as securities. If Terra tokens LUNA, LUNC, and UST (formerly USTC) are proven to be securities, TerraForm Labs, its founder Do Kwon, and other affiliates will be charged with breaking the Capital Market Act.
Prosecutors are looking at whether Terra falls under the Securities Act.
The Seoul Southern District Prosecutors Office’s Financial and Securities Crime Joint Investigation Team met with experts from crypto exchanges and financial regulators, including the Financial Supervisory Service, to evaluate if Terra tokens are securities.
TerraForm Labs, Do Kwon, and other affiliates will also be accused of violating the Capital Markets Act. Terra and its management are currently being investigated for suspicions of fraud and tax violations.
Regardless of the financial authorities’ decision, prosecutors investigating the collapses of LUNA (now LUNC) and UST (now USTC) may charge the defendants with Capital Markets Act crimes. Furthermore, the decision of the prosecutors will aid lawmakers in the impending crypto regulation.
Financial regulators are attempting to classify cryptocurrencies as securities or non-securities. However, some experts say cryptocurrency is security since it can be issued like a stock, but others believe cryptocurrency is a commodity owing to its decentralized nature.
The Securities and Exchange Commission (SEC) of the United States is also looking into LUNA developer Terraform Labs. Mirror Protocol, Terra’s decentralized financial platform, is being investigated for trading mirrored assets of US stocks in UST.
LUNA and LUNC Soar Due to Community Support
While South Korean authorities investigate charges of fraud and other wrongdoing against Terra, LUNC, and LUNA tokens increased by more than 200% last week. Both tokens had a daily trading volume of more than $3.5 billion.
The price of Terra Classic (LUNC) reached a high of $0.00058. It is currently trading at $0.00037, a decrease of approximately 2% in the previous 24 hours. The surge coincides with support for the 1.2% tax burn and LUNC token staking.
Meanwhile, the price of Terra (LUNA) has risen to a high of $7.06. The price dropped to $4.52 at the time of writing.