Key Takeaways:
- Do Kwon, CEO of Terraform Labs, is out on bail in Montenegro, awaiting extradition to the U.S. or South Korea.
- Terraform Labs and Do Kwon have reached a preliminary settlement with the SEC over a civil fraud case, with documentation due by June 12.
- The SEC accused them of misleading investors and causing the collapse of a $40 billion ecosystem, seeking a $5.3 billion penalty.
Do Kwon, the CEO of Terraform Labs, is out on bail in Montenegro, awaiting extradition to the U.S. or South Korea.
Terraform Labs and Do Kwon have reached a “settlement in principle” with the SEC over a civil fraud case.
Terraform Labs, Do Kwon agree to settle SEC civil fraud case https://t.co/Ci88wpphNQ pic.twitter.com/m47YTtzsWT
— Reuters (@Reuters) May 30, 2024
A court filing indicated that a May 29 telephone conference took place with all parties’ counsels present, but without transcription or recording.
The parties must submit settlement documentation by June 12 to Judge Jed S. Rakoff.
This settlement comes shortly after Terraform Labs and Kwon were found liable for misleading investors about their products in a trial.
The SEC accused them of causing the collapse of a $40 billion ecosystem around the stablecoin UST and LUNA in May 2022.
In late May, the SEC sought a $5.3 billion penalty, the highest ever for a cryptocurrency project.
Terraform Labs argued for a smaller penalty, with CEO Chris Amani noting the company’s bankruptcy and limited assets. Kwon’s lawyers stated he had no illegal profits.
Terraform Labs, Do Kwon reach a 'settlement in principle' with US SEC, according to court entry https://t.co/EZBaZsvWq2
— The Block (@TheBlock__) May 30, 2024
Kwon remains in Montenegro, facing extradition and additional criminal charges in both New York and South Korea.
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