The decision came out in the case filed by the US Securities and Exchange Commission (SEC) against Terraform Labs and its founder Do Kwon in February.

The court found in favor of the SEC and ruled that the LUNA tokens sold by Do Kwon were unregistered investment contracts and that Kwon had committed a crime.

Following the decision, LUNA, LUNC and USTC saw small declines in price.

Kwon was the founder of Terraform Labs, the company behind LUNA and the algorithmic stablecoin TerraUSD (UST), which lost its peg to the US dollar in 2022, triggering a complete market crash. The SEC had accused Terraform and Kwon of misleading investors about UST’s stability and claiming that the tokens he issued would increase in value.

Kwon was also accused of fraud by US prosecutors. US District Judge Jed Rakoff denied the parties’ motions for summary judgment on the fraud claims. Accordingly, a hearing on these claims will be held on January 29, 2024.

The US is seeking Kwon’s extradition from Montenegro.