Terraform Labs and Do Kwon reach tentative settlement with SEC
Terraform Labs and its creator, Do Kwon, have reached a settlement with the SEC, concluding the U.S. filed civil case accusing them of misleading cryptocurrency investors.
This resolution follows a decision by a U.S. District Court jury in the Southern District of New York, which in April adjudged both Kwon and the firm responsible for fraud.
While specifics of the agreement remain undisclosed, the court's website has revealed the initial settlement. Judge Jed Rakoff of the U.S. District has called for both parties, the SEC and the accused, to present required documentation by June 12.
Litigation Details
The SEC has charged Kwon along with Terraform Labs with presenting deceptive information about the security of their digital currency, TerraUSD, and making unfounded claims that their blockchain was integrated within a leading Korean mobile payment application.
This purported scam precipitated the downfall of TerraUSD and its associated digital currency, LUNA, in May 2022, inflicting over $40 billion in investor losses. The SEC has depicted this collapse as a colossal fraud that eradicated vast market values in a blink.
Demands from the SEC included substantial monetary penalties, demanding a surrender of $5.3 billion viewed as improperly gained profits and imposition of fines amounting to $520 million against both Terraform Labs and Kwon.
Conversely, the defense by Kwon and his enterprise argued that the peak fines should be considerably lesser, limited to $3.5 million for Terraform Labs and below $1 million for Kwon himself.
Kwon’s Judicial Challenges
Kwon, also facing related criminal accusations in both the U.S. and South Korea, has repudiated all charges. His arrest occurred in Montenegro during March 2023 as he attempted to depart the country with forged documentation.
Following his capture, Kwon has been in detention, awaiting exploration on whether he would be extradited to the U.S. or South Korea, after concluding a sentence in Montenegro. The decision from Montenegrin officials is pending.
The accord signifies a crucial phase in remedying the repercussions of one of the crypto sector's most significant downturns and spotlights the SEC’s resolve in addressing deceptive practices within the realm of cryptocurrencies.
