Key Takeaways:
- Terraform Labs and former CEO Do Kwon agreed to a $4.5 billion settlement with the SEC, pending judicial approval, which includes penalties and a trading ban.
- The settlement follows a New York jury’s April verdict holding Kwon and Terraform Labs liable for the $40 billion collapse of the Terra ecosystem.
- Kwon, detained in Montenegro and awaiting extradition, faces a $204 million payment as part of the agreement.
Terraform Labs and former CEO Do Kwon have agreed to a $4.5 billion settlement with the SEC, pending approval from a New York judge.
This agreement includes disgorgement, prejudgment interest, and civil penalties.
It’s predictably on-brand to tout a settlement with Kwon and the now-bankrupt Terraform totaling $4.7 billion. But the settlement just makes the SEC an unsecured creditor in the BK and only orders Kwon to hand over $7 million of assets he actually has. There’s zero meaningful… https://t.co/x4AFd8gPXs
— paulgrewal.eth (@iampaulgrewal) June 12, 2024
If accepted, it will permanently ban Kwon and Terraform Labs from trading crypto asset securities, including Terra tokens.
SEC lawyers have urged the court to approve the settlement, stating it would deter future misconduct and establish standards for crypto assets.
Terraform Labs has not commented on the settlement’s implications.
In April, a New York jury found Kwon and Terraform Labs liable for civil fraud related to the $40 billion collapse of the Terra ecosystem in May 2022.
Kwon, currently detained in Montenegro and awaiting extradition decisions, did not attend the trial.
The agreement, reached on June 6, stipulates Kwon must pay at least $204 million.
Terraform Labs and Do Kwon to Pay $4.5 Billion to Settle SEC Fraud Case
— Decrypt (@decryptmedia) June 12, 2024
► https://t.co/qBguyHqkpl https://t.co/qBguyHqkpl
This penalty is less than the SEC’s initial $5.3 billion demand but higher than Terraform Labs’ proposed $1 million penalty.
Terraform, in Chapter 11 bankruptcy, has about $150 million in assets remaining.
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