At the moment, the South Korean authorities are re-examining the case of the Terra ecosystem. They aim to evaluate the characteristics of the tokens associated with it, such as Luna Classic (LUC), TerraClassicUSD (USTC), etc. Upon completion of this review, investigators will be able to bring new charges against Terraform Labs and Do Kwon.
Terra, new lawsuits?
The collapse of Terra last May did not leave the South Korean authorities indifferent. An in-depth investigation has been launched in order to clarify the gray areas surrounding this affair.
Yesterday, Forkast revealed that the prosecutors in charge of this case are in the process of reviewing the case of the Terra blockchain. This time, they thoroughly examine LUNC and USTC tokens to identify their characteristics. At the end of this investigation, they will be able to determine whether these assets are securities or not.
Do Kwon and his team must currently take their troubles patiently before the publication of the report of this investigation. Indeed, if LUNC, USTC and Terra’s DeFi services are found to fall into the “securities” category, further charges will await them in court.
Koo Tae-on, attorney at South Korean firm Lin, explains:
” If they are considered securities, prosecution is easier, as issuing unregistered securities is a violation of capital markets law. »
The Howey test in a nutshell
According to Business Insider, the Howey test is presented as a set of standards to be considered by an investor before obtaining a classification as a “security” by the SEC. Taken from a judgment issued by the Supreme Court of the United States issued in the 1940s, this test allowed the Securities and Exchange Commission to sue WJ Howey Co..
The reason ? This company specializing in the sale of plots of land with orange trees had failed to register the transactions with the American regulator. Now, WJ. Howey Co. earned profits for its buyers by continuing to operate the citrus groves on land already sold.
After winning this lawsuit, the SEC codified 4 requirements to better define a securities transaction. Those are : ”  an investment of money  in a joint venture  with the expectation of profit  derived from the efforts of others. »
According to a South Korean media, local prosecutors will be able to use the Howey test to better examine Terra’s case.
Will this new review of Terra’s situation have an impact on the recovery benefiting investors at the moment? Because many of them see hope dawning in this ecosystem which has suffered so much from the recent fall of LUNA and UST.
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