Terraform to pay $4.47B to settle SEC civil suit
Terraform Labs has agreed to pay about $4.47 billion to the U.S. Securities and Exchange Commission (SEC) as part of a settlement with the securities regulator. The total remedies include approximately $3.6 billion in fines, $420 million in civil penalties and approximately $467 million in prejudgment interest.
The settlement stripped investors of $40 billion after the jury found Terraform Labs and its co-founder liable for the collapse of the Terra ecosystem.
According to the settlement, former Terraform Labs CEO Do Kwon is liable for $110 million in disgorgement penalties, $80 million in civil penalties and approximately $14.3 million in prejudgment interest. The settlement document sets out the following immediate and short-term measures:
“If Kwon's filing with the SEC and Terraform's bankruptcy assets in the bankruptcy case total not less than $204,320,196, payment of monetary remedies against Kwon, excluding the value of Terraform's crypto assets transferred to Terraform's bankruptcy, will be deemed satisfied. Only if Kwon completes: (1) within 30 days of the final judgment against Kwon and Transfer of $4,700,000 to a fictitious account agreed upon by Commission staff.
The filing also stipulates the transfer of all crypto assets to the Luna Foundation Custody and all Pyth Network (PYTH) token holdings from the sale of the assets to cover the cost of redemption penalties and advance interest. It applies to civil penalties.
SEC v Terraform Labs – Quick History
The SEC filed a lawsuit against Terraform Labs in 2023, accusing the company and its founder, Do Kwon, of selling unregistered securities and defrauding investors after the collapse of the Terra ecosystem.
RELATED: Extradition of Do Koo to return to Montenegro High Court after appeal.
In the year In 2022, the TerraUSD algorithmic stablecoin began to show signs of stability, followed by a flight of investors from the Terra ecosystem, which was essentially a bank run.
Soon after widespread concerns about the Terra ecosystem gripped the market, TerraUSD lost its dollar peg, causing billions in losses for asset owners.
Founder Do Kwon is still in shock.
Do Kwon's fate remains uncertain as courts in Montenegro grapple with what to do with the South Korean.
The Montenegrin courts have changed their decision to extradite Kwon several times. Lawyers for Terraform's founders have scuttled the court process with numerous appeals filed by lawyers alleging malpractice and lower court appeals.
As of this writing, the highest court in Montenegro is still trying to decide whether to extradite the Terraform founder to his home country or the United States to face charges.
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