FSS governor Lee Bok-hyun from South Korea says he disagrees with the view that crypto cannot be seen as financial investment products or securities. He also reveals he aided local prosecutors in designating Terra-LUNA tokens as securities.
On 15th September 2022, Lee Bok-hyun, Director of the Financial Supervisory Service (FSS), attested to having provided the local prosecutors with data designating Terra-LUNA tokens are Securities.
President Lee Bok-hyun also strongly supports the idea that crypto can be held as financial investment products or securities.
“I disagree with the view that some virtual assets do not have parts that can be recognized as financial investment products or securities,” he stated
President Lee explains that parties such as the financial authorities and the prosecutors can decide whether or not to hold digital assets as securities.
“As a lawyer or a person in charge of financial affairs, there is an opinion that ‘if certain requirements are met, it can be judged as securities’ materials have been provided,” Lee added.
Securities or not?
This comes after TerraLUNA collapse investigators announced investing if Luna Classic, Terra Classic USD and associated DeFi services have securities characteristics. The prosecutors revealed the findings would help South Korea with new charges against CEO Do Kwon and Terraform Labs.
“If they’re viewed as securities, the prosecution is easier because the issuing of unregistered securities is a violation of the capital markets act,” Koo Tae-on, a lawyer at South Korea-based law firm Lin, reported.
A South Korean media reports that some crypto experts do not classify cryptocurrencies as securities. Especially because the value of the decentralized asset is not derived from the efforts of a specific entity.
South Korea’s investigation comes after South Korean President Yoon Suk-yeol announced that his administration will regulate cryptocurrencies in two ways. Which are tokens that resemble securities and non-securities. The regulatory plan was proposed in May but South Korea is yet to classify digital assets into a clearly constructed regulatory framework.
South Korea on Terraform Labs
On 14th September 2022, the Korean Court issued an arrest warrant against the co-founder of the defunct Terraform Labs, Do Kwon. The arrest warrant included five more individuals, all together (with Do Kwon) charged with violating the Capital Market Act. Allegedly the accused saw Terra and its sister stablecoin as securities.
Following Do Kwon’s arrest warrant the South Korean Ministry of Foreign Affairs is working on confiscating his passport.
The warrant come in four months later after the collapse of Terra and its sister stablecoin, a $40 billion Terra ecosystem. The collapse led to billions of investments evaporating and to an industry-wide fallout with the Celsius Network crypto lender and Voyager Digital crypto broker.
Earlier on in June 2022, Do Kwon was also accused of cashing out $2.7 billion before the defunct stablecoin UST depegged from its $1 parity.
