Terraform Labs and founder Do Kwon have reached a tentative agreement with the U.S. Securities and Exchange Commission (SEC).
The SEC accused them of misleading cryptocurrency investors ahead of the collapse of stablecoin TerraUSD in 2022.
Do Kwon agrees to resolve SEC civil fraud case
Payment details have not yet been disclosed. Last April, a jury found Kwon and Terraform Labs liable on civil fraud charges. The SEC alleged in 2021 that it misled investors about the stability of TerraUSD and falsely claimed that Terraform’s blockchain was used in a popular mobile payments app in South Korea.
U.S. District Judge Jed Rakoff in Manhattan asked both parties to submit documents supporting the agreement by June 12. SEC representatives and the defendants declined to comment.
The collapse of TerraUSD and its related token Luna threw cryptocurrency markets into turmoil in May 2022. Investors in both cryptocurrencies lost more than $40 billion. The SEC asked Judge Rakoff to force Kwon and Terraform Labs to give up $5.3 billion in stablecoin sales. The SEC also demanded a fine of $420 million from the company and $100 million from Kwon. They also called for a ban on trading in ‘crypto-asset securities’.
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Kwon and Terraform Labs argued for significantly lower fines, proposing fines of up to $3.5 million for the company and less than $1 million for Kwon. Kwon, who faces related criminal charges in both the U.S. and South Korea, has denied any wrongdoing. He has been awaiting extradition since his arrest in Montenegro in March 2023, and Montenegrin authorities are deliberating whether to send him to the United States or South Korea.
The cryptocurrency community is showing mixed reactions to this agreement. Some people question how Terraform Labs plans to return the money. This news also had an impact on market movements. LUNA initially rose more than 22%, but then plummeted, down 14% in the last 24 hours.
Read more: Terra (LUNA) Price Prediction 2024/2025/2030
The agreement between Terraform Labs, Do Kwon, and the SEC has major implications for the cryptocurrency market. As legal issues continue, the entire industry is paying attention as the result could become a decisive precedent. Terraform Labs and the founders expect to finalize and submit the terms of the agreement by mid-June.
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