SEC Settles with Terraform Labs and Do Kwon
Terraform Labs and its former CEO, Daokun Kuo, have agreed to a settlement agreement by paying approximately $4.5 billion in restitution and civil penalties to the U.S. SEC.
Court documents show that Terraform Labs and its former CEO, Do Kwon, have agreed to pay approximately $4.5 billion in restitution and civil penalties to the U.S. Securities and Exchange Commission (SEC) as part of a settlement agreement with U.S. regulatory authorities.
Under the agreement, Do Kwon and Terraform Labs will be permanently barred from buying and selling securities involving crypto assets, including tokens within the Terra ecosystem.
Another key aspect of the settlement
However, the settlement agreement still needs approval from Judge Jed Rakoff of the Southern District of New York, who is overseeing the case. The SEC's lawyers have submitted a letter seeking approval from the judge.
Regulatory lawyers wrote, "If approved, the proposed judgment will send a clear deterrent message not only to those engaging in public improprieties but also to those attempting to evade federal securities law requirements by setting new conduct standards."
According to the agreement, the total settlement amount is $4.473 billion, with Do Kwon personally liable for at least $204.32 million.
Initially, U.S. regulators sought a $5.3 billion settlement. However, the defendants' legal representatives countered with an offer of a $10 million civil penalty with no restitution or injunctions.
Do Kwon's uncertain fate
Do Kwon gained prominence for founding Terraform Labs. However, the project's two cryptocurrencies, TerraUSD and Luna, collapsed in 2022, causing a market loss of approximately $37 billion. The collapse of the algorithmic stablecoins led to the closure and bankruptcy of several other cryptocurrency firms.
Following the collapse of his company, he disappeared from public view but was arrested last year in Montenegro for using fake travel documents. South Korea and the U.S. have been attempting to extradite him, although technical issues surrounding the extradition ruling led to his release on bail from Montenegro's prison.
In April last year, the SEC formally charged Do Kwon and his company with fraud, with a trial against Do Kwon held in absentia.
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