- Terraform Labs and founder Do Kwon have settled with the U.S. SEC.
- The settlement follows a civil fraud trial in New York.
- The SEC sought a $5.3 billion penalty, its largest fine on a cryptocurrency project.
- Required documents supporting the settlement must be filed by June 12.
- Do Kwon is out on bail in Montenegro, awaiting extradition to either the U.S. or South Korea.
Terraform Labs and its founder, Do Kwon, have reached a tentative settlement with the U.S. Securities and Exchange Commission (SEC), according to Reuters.
This development comes amid allegations of misleading cryptocurrency investors before TerraUSD’s collapse in 2022.
Settlement Details
The agreement was made during an ongoing civil fraud trial in New York. The SEC had aimed to impose a $5.3 billion penalty on Terraform Labs, marking its steepest fine yet for any cryptocurrency project.
A telephone conference took place on May 29 without transcription or recording. During this call, counsels for all parties informed the court about reaching a settlement in principle. As a result, an oral argument scheduled for that day was canceled.
Judge Jed S. Rakoff has asked both parties to file documents supporting the settlement by June 12.
Legal Background
In April, a jury found Kwon and Terraform Labs liable for civil fraud charges related to misleading investors about TerraUSD’s stability back in 2021.
The company also falsely claimed that their blockchain technology was used in a popular Korean mobile payment app.
Do Kwon is currently out on bail in Montenegro while awaiting extradition either to the United States or South Korea where he faces additional criminal charges related to his role at Terraform Labs.
Kwon co-founded TerraUSD along with its sister token LUNA under what became known as the Terra ecosystem which collapsed dramatically last year causing widespread impact across the industry.
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