Terraform Labs, the company at the center of a significant collapse in 2022, has agreed to pay a substantial settlement of $4.47 billion to resolve a civil lawsuit filed by the US Securities and Exchange Commission (SEC).
This legal action was undertaken following the collapse, which resulted in the loss of $40 billion in investor assets and sent shockwaves throughout the cryptocurrency industry.
Terraform Labs And Do Kwon Liable For Collapse
The SEC recently sought approval from a federal judge in New York for the settlement with Terraform. The agreement was reached subsequent to a jury finding the company and its co-founder, Do Kwon, liable for the collapse after a two-week trial.
According to the settlement filing, “Payment of the monetary remedies against Kwon shall be deemed satisfied, provided that all transfers by Kwon to the SEC and the Terraform bankruptcy estate in the Bankruptcy Case total no less than $204,320,196. Transferring into an escrow account agreed by Kwon and the Commission staff $4,700,000 within 30 days of Final Judgment.”
Victory For SEC
The SEC’s allegations against Terraform Labs and Kwon state that from at least April 2018 through May 2022, Terraform and Kwon offered and sold crypto asset “securities in unregistered transactions” and perpetrated a fraudulent scheme that led to the loss of at least $40 billion of market value.
Additionally, regulators alleged the defendants misled investors about TerraUSD’s stability, falsely claiming Terraform’s blockchain was integrated into popular Korean mobile payment apps.
Ultimately, this development represents a victory for the US SEC, as Terraform Labs and its founder Do Kwon, who is facing extradition to the US, had previously proposed civil penalties of up to $3.5 million, with Do Kwon requesting a penalty of $800,000.
As of this writing, the company’s Luna Classic (LUNC) token is trading at $0.0001076, up nearly 8% in the 24-hour time frame.
Featured image from Shutterstock, chart from TradingView.com
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