Terraform Labs and its founder, Do Kwon, based in Singapore, have reached a preliminary settlement with the U.S. Securities and Exchange Commission (SEC). This settlement concerns allegations that they misled investors about TerraUSD before its collapse in 2022.
According to Reuters, which refers to court documents, the details of the deal are not yet known. However, a jury previously found Do Kwon and Terraform Labs guilty of civil fraud charges.
SEC Accusations and Community Reactions to Terraform Labs Settlement
The SEC accused Terraform Labs and its founder, Do Kwon, of deceiving investors in 2021 about the stability of TerraUSD, a stablecoin designed to maintain its value at $1. The regulator also alleged that Kwon and the firm falsely claimed Terraform’s blockchain was used in a popular Korean mobile payment app.
The crypto community appears divided on the settlement’s implications. Some anticipate a positive impact on Terra Classic’s (LUNC) price, while others question how the firm plans to return the money.
Source: X
Previously, the SEC demanded that Kwon and Terraform Labs forfeit $5.3 billion in alleged ill-gotten gains from stablecoin sales. It also sought fines of $420 million for the company and $100 million for Kwon, along with bans on dealing in “crypto asset securities.”
Market Reaction and Ongoing Legal Battles for Terraform Labs
Following the news, Terra Classic (LUNC) surged over 9% to $0.00012, and the new token, LUNA, gained over 13%, according to CoinMarketCap.
The collapse of TerraUSD and Terra Classic disrupted cryptocurrency markets in May 2022, with the SEC estimating that investors lost over $40 billion. Kwon and his company argued that the maximum fines should be $3.5 million for Terraform Labs and less than $1 million for Kwon, the mastermind behind TerraUSD.
Kwon, who faces criminal charges in the U.S. and South Korea, denies any wrongdoing. Arrested in March 2023, he is still awaiting extradition from Montenegro.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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