Do Kwon’s attorneys said Coinbase does not list securities and the SEC has not been given authority by Congress to regulate digital assets as securities or commodities.
The Terra Luna and Do Kwon case could take a different direction after a South Korean court ruled that the rebranded LUNC project is not a security product. As a result, Do Kwon’s attorneys were motivated to petition the U.S. Securities and Exchange Commission (SEC) to stop pressuring the judiciary over lack of jurisdiction. Its lawyers noted in a court filing that Terra LUNA was a global currency that never participated in an initial coin offering (ICO).
Additionally, the attorneys argued that the LUNA coin sales were never intended for any of the United States persons. Thus denying the jurisdictions of the United States SEC over Do Kwon and Terra Luna UST.
“TFL has not conducted any public offerings that require registration with the SEC. The CA does not allege that the defendants solicited sales of digital assets to the general public anywhere. The disputed LUNA and MIR token sales were exempt from registration under multiple exemptions. And the Defendants had no involvement in the programmatic minting of mAssets by the Mirror Protocol nor did they solicit transactions on the protocol from persons based in the United States,” the court documents noted.
As a result, Do Kwon’s lawyers asked the court to dismiss the charges due to insufficient factual statements. Court documents noted that Terraform Labs is a Singaporean open-source software development company that was served by Kwon as CEO. In its defense, Terra Luna UST noted that it is an algorithmic stablecoin that only works to adjust the money supply in response to changes in demand.
What future for the victims of Do Kwon and Terra Luna?
A recent investigation by South Korean law enforcement revealed that Do Kwon does not own any physical assets such as houses, cars, or land that can be liquidated to Terra victims. Terra Luna’s customers being global, the case becomes even more complicated to identify the victims. Additionally, the Terra Protocol provided services to the decentralized financial protocols and centralized mint and adjust exchanges of LUNA and UST.
In return, the Challenge and CEX protocols provided Terra Luna and UST tokens to their customers. Therefore, the real value of affected users may never be fully understood since some protocols like FTX have since collapsed.
Nevertheless, Do Kwon is still to be prosecuted for fraud after he was arrested while trying to flee to Dubai in Montenegro.
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