In the wake of the recent Terra LUNA crypto crisis, South Korean prosecutors revealed plans to launch a new investigation into Terraform Labs and its executives.
According to a Korean Herald report, the Seoul Southern District Prosecutor's Office's Securities and Financial Crimes Joint Investigation Team has met with several crypto experts and financial regulators to review the Terra token.
At the same time, prosecutors are tasked with categorizing Terra's digital assets as well as its original token LUNA under securities, while financial regulators are working to determine which crypto assets should be categorized as securities and non-securities.
Understandably, although some experts argue that cryptocurrencies are securities because they can be issued like stocks, most investors believe the digital asset should be classified as a commodity due to its decentralized characteristics.
The string, Do Kwon, the founder of Terraform Labs and its executives will be charged with violating the Capital Markets Act if Terra tokens are designated as securities in the investigation.
In fact, the firm was hit with fraud and tax evasion charges following the UST debacle in early May that resulted in the loss of more than $60 billion in investor funds.
Additionally, the latest investigation comes as part of South Korean prosecutors' efforts to widen their investigation into TerraForm Labs over the LUNA and UST collapses.
As such, Korean authorities have been investigating several individuals and entities related to the Terra case including helping policymakers develop the country's legal framework for crypto regulation.
