1. Case summary and major issues
The 바카라 사이트 꽁머니 Project aimed to introduce a global blockchain payment system applicable to real life with the price stability algorithm of certain coins called “바카라 사이트 꽁머니” and “Luna”. The 바카라 사이트 꽁머니 Project was building a huge ecosystem to the extent that it would rank in the top 10 market capitalization rankings in the global virtual currency market around 2021. However, from around May 7, 2022, external attacks using vulnerabilities in the price stabilization algorithm and other negative factors intertwined, resulting in a “death spiral”, and 99% of the market capitalization, which had reached 50 trillion Korean won, evaporated in just one week.
Regarding this incident, the Joint Investigation Team for Financial Securities Crimes of the Seoul Southern District Prosecutors’ Office conducted an omnidirectional investigation under the premise that “the entire 바카라 사이트 꽁머니 Project was fictitious”. On November 29, 2022, the Seoul Southern District Prosecutors’ Office requested arrest warrants for eight people, including the founder and programmer of Terraform Labs, on charges of violating the Capital Markets Act and the Act on Aggravated Punishment of Specific Economic Crimes (Fraud).
Barun Law responded to the prosecution's request for an arrest warrant on behalf of the programmer who had developed and managed a payment system, Chai Pay.
2. Our argument and role
We had been engaged by the client just two weeks before the arrest warrant was requested, so time was running out. However, we prepared and submitted an attorney's opinion that refuted all the allegations made by prosecutors in the request for the arrest warrant as follows: (i) after thoroughly analyzing the facts, we asserted that the suspect was only in charge of the 바카라 사이트 꽁머니-related payment system and was not involved in the operation of the 바카라 사이트 꽁머니 Project; (ii) the 바카라 사이트 꽁머니 Project was stranded due to an unexpected price collapse of 바카라 사이트 꽁머니 and Luna coins, and it could not be considered as a fiction from the beginning; (iii) 바카라 사이트 꽁머니, Luna, and Mirror and Anchor Protocols could not be regarded as “securities” under the Capital Markets Act; (iv) the suspect had not received any illegal profits other than wages from Kwon Do-Hyung for his service; and (v) other charges alleged by the prosecution had no legal grounds. The argument session was held for as long as 13 hours on the day of the warrant review.
3. The main point and meaning of the decision
The Seoul Southern District Court said, “It seems that the objective factual relationship has been identified to a considerable extent by the evidence obtained so far. However, it is questionable whether the Capital Markets Act is applicable to 바카라 사이트 꽁머니 and Luna by recognizing them as securities, and it is difficult to see that there is a necessity and reasonableness of arrest”. As a result, the suspect can be fully guaranteed the right to defend in the fierce court battle that will be held in the future.
It is of global interest whether virtual assets such as 바카라 사이트 꽁머니 and Luna can be regarded as “securities” under the Capital Markets Act. Although this case was not a trial on the merits, it was the first case in the world in which the Korean judiciary expressed its position on whether virtual currency was recognized as securities. It is a significant case that could determine the direction of the entire virtual currency market with a market capitalization of $1 trillion and related lawsuits simultaneously in progress in various parts of the world, depending on the court's decision.
□ Attorneys in charge: Cho Jae-Bin, Lee Seo-In, Lee Kyu-Won and Kim Hyeon-Seong
