Investigations have been conducted against Terraform Labs, its founder Do Kwon, and other people associated with the company in many jurisdictions across the globe. At the beginning of this year, Terra [LUNA] and its native stablecoin UST both saw a significant loss in value. This led to significant losses for those who had invested. The same event also had a domino effect on the ecosystem as a whole, and as a result, the market as a whole became choppy.
According to the most recent information, the police in South Korea have filed a warrant for Do Known, which indicates that they plan to arrest the person responsible for founding Terra. According to a text message sent by the prosecutor’s office, the court in Seoul issued an arrest warrant for Do Kwon and five other individuals.
What exactly are the Terraform Labs?
The Terra blockchain network and the Anchor inter-chain Defi program were both developed by Terraform Labs. Anchor pools emissions from proof-of-stake (PoS) blockchains, stabilizes them and then passes them on to depositors as a set, high-yield reward.
Terra is a blockchain technology that enables price-stable global payment networks to be powered by stablecoins that are tethered to fiat currency. According to the company’s white paper, Terra is a cryptocurrency that combines the censorship-resistance of Bitcoin (BTC) with the price stability and widespread acceptance of fiat currencies, and it also enables rapid and economical transactions.
Terra’s development began starting in January 2018, and the platform’s mainnet went live in April 2019 (officially). It plans to bring out other alternatives, but as of September 2021, it provides stablecoins that are tied to the United States dollar, the South Korean won, the Mongolian tugrik, and the basket of currencies that make up the Special Drawing Rights of the International Monetary Fund.
The price of the stablecoins that are associated with Terra’s protocol is maintained with the help of its native token, LUNA. The functionality of a governance token is given to the LUNA cryptocurrency since holders can propose and vote on governance proposals.

Infractions of the Capital Market Act on the part of Terra
In this context, it is important to keep in mind that a local media outlet not so long ago claimed that South Korean authorities were examining whether or not the Terra ecosystems have qualities that are typical of securities. Notably, the investigating team working on the Terra case at the Seoul Southern District Prosecutor’s Office was evaluating the securities qualities of Luna by referencing examples from other countries.
It was alleged that the prosecutors had specialists in virtual assets brought in so that they might hear multiple viewpoints. In addition to this, they used monetary authorities such as the Financial Supervisory Service as reference individuals.
They stated yesterday that if the prosecution discovers that Luna and Terra have securities properties, they might be prosecuted for breaking the Capital Market Act for engaging in unfair trading, such as manipulating market prices. Bloomberg reported the following to confirm the rationale for the issuing of the warrants: Earlier in the day, it was claimed in a local newspaper that the warrant was associated with a breach of the regulations governing the stock market.
Final Thoughts
At the moment, virtual assets are not considered to be securities; hence, the Capital Market Act does not apply to them. In a circumstance in which the conversation has advanced significantly, there is a strong likelihood that the Luna-Tera case will become Korea’s “leading case,” regardless of what charges are charged. This potential exists even though the discussion has proceeded quite a little.
Only the charges about Coinone’s margin trading were reviewed by the appropriate authorities in 2018, and since then, nothing more has been done in this regard. Therefore, if the relevant public authorities investigate it, it will surely have a crippling impact on the situation.
It seemed up to this point that the regulatory bodies in charge of finance were adopting a cautious position against Terra and its boss. The issuing of the most recent arrest warrant, on the other hand, provides some indication of a shift in position.