Do Kwon’s lawyers indicated that Coinbase does not list securities, and the SEC has not been granted the powers by Congress to regulate digital assets as securities or commodities.
The Terra Luna and Do Kwon case could be headed in 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 lawyers were motivated to ask the United States Securities and Exchange Commission (SEC) to stop pushing with the legal pressure due to lack of jurisdiction. His lawyers noted in a court filing that Terra LUNA was a global currency that never participated in an initial coin offering (ICO).
Additionally, the lawyers argued that sales of LUNA coins were never directed to any of the United States persons. Thereby denying the United States SEC jurisdictions over Do Kwon and Terra Luna UST.
“TFL conducted no public offerings requiring SEC registration. The AC does not allege that Defendants solicited any sales of digital assets to the general public anywhere. The challenged LUNA and MIR token sales were exempt from registration under multiple exemptions. And Defendants had no involvement in the programmatic minting of mAssets by the Mirror Protocol nor did they solicit transactions on the protocol by US-based persons,” the court filings noted.
As a result, Do Kwon’s lawyers have requested the court to dismiss the charges due to insufficient factual statements. The court filings noted that Terraform Labs is a Singaporean open-source software development firm that was serviced by Kwon as the CEO. In its defense, Terra Luna UST noted that it is an algorithmic stablecoin that operated only to adjust the money supply in response to changes in demand.
What Next for Do Kwon and Terra Luna Victims?
A recent investigation by South Korean law enforcement revealed that Do Kwon does not have physical assets like houses, cars, or lands that can be liquidated in favor of Terra victims. Since Terra Luna’s clients were global, the case gets even more complicated to identify the victims. Moreover, the Terra protocol provided services to decentralized financial protocols and centralized exchanges of minting and adjusting LUNA and UST.
In return, the DeFi and CEX protocols provided Terra Luna and UST tokens to their customers. As a result, the real value of affected users may never be fully understood since some protocols like FTX have since collapsed.
Nevertheless, Do Kwon remains to be prosecuted for fraud charges after he was arrested trying to flee to Dubai in Montenegro.
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