Monday, June 24, 2024

Terraform Labs CEO Do Kwon Reaches Settlement with SEC Over Civil Fraud Case

Tentative Settlement Reached in SEC Lawsuit Against Singapore-based Terraform Labs and Founder

The news of a tentative settlement between Singapore-based Terraform Labs and its founder Do Kwon with the U.S. Securities and Exchange Commission has sent shockwaves through the cryptocurrency world. The SEC had sued the company and Kwon for allegedly misleading investors before the 2022 collapse of the stablecoin TerraUSD.

The settlement, although not disclosing its terms, was revealed on a court website on Thursday. This comes after a jury found Kwon and Terraform Labs liable on civil fraud charges in April. The SEC had accused them of misleading investors about the stability of TerraUSD and falsely claiming their blockchain was used in a popular Korean mobile payment app.

The collapse of TerraUSD and Luna, a token closely linked to TerraUSD, caused turmoil in the cryptocurrency markets in May 2022. The SEC estimated that investors lost over $40 billion when the stablecoin’s peg to the dollar could not be maintained.

The SEC had requested Kwon and Terraform Labs to relinquish $5.3 billion in ill-gotten gains and sought fines of $420 million for the company and $100 million for Kwon. They also asked for both to be banned from dealing in crypto asset securities. Kwon faces criminal charges in the U.S. and South Korea, but has denied any wrongdoing.

Since his arrest in March 2023, Kwon has been awaiting extradition from Montenegro, with authorities debating where he should be sent. The outcome of this settlement could have far-reaching implications for the cryptocurrency industry as a whole. Stay tuned for further updates on this developing story.

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