Terraform Labs has agreed to settle with the United States Securities and Exchange Commission (SEC) by paying approximately $4.47 billion. This settlement includes disgorgement fines of around $3.6 billion, a civil penalty of $420 million, and prejudgment interest totaling nearly $467 million.
The settlement comes after Terraform Labs and its co-founder were found responsible for the collapse of the Terra ecosystem, resulting in the loss of $40 billion in investor assets.
As per the agreement, former Terraform Labs CEO Do Kwon is obligated to pay $110 million in disgorgement penalties, $80 million in civil penalties, and about $14.3 million in prejudgment interest fines. The settlement plan outlines the immediate and short-term actions to be taken, including the transfer of all crypto assets from the Luna Foundation Guard and Pyth Network (PYTH) token holdings from Kwon to cover the disgorgement fines and prejudgment interest, with any surplus to be applied towards the civil penalty fines.
The SEC lawsuit against Terraform Labs was filed in 2023, alleging the sale of unregistered securities and investor fraud following the collapse of the Terra ecosystem. In 2022, the instability of the TerraUSD stablecoin triggered a mass exodus of investors, leading to a significant loss of assets when the coin lost its peg to the dollar.
The fate of Do Kwon remains uncertain as Montenegrin courts deliberate on whether to extradite him to South Korea or the United States to face charges. The high court in Montenegro is still deliberating on this decision amidst multiple appeals and legal challenges.
In other news, ChainArgos reports on the mysterious disappearance of Polygon’s MATIC tokens, with many pointing fingers at various entities for the missing funds.