Terraform Labs, the company behind the cryptocurrency tokens TerraUSD (#UST) and Luna (#LUNA), has agreed to pay a whopping $4.47 billion to settle charges with the U.S. Securities and Exchange Commission (#SEC). This comes after a jury ruled against Terraform Labs and its founder Do Kwon in April 2024, finding them responsible for misleading investors.
The SEC’s case hinged on claims that Terraform Labs misled investors about the stability of $UST, a so-called “stablecoin” designed to maintain a steady value of $1. Additionally, the SEC accused the company of making false statements regarding the adoption of their blockchain technology by a major Korean mobile payment app. These alleged actions are believed to have contributed to the dramatic crash of UST and $LUNA in May 2022, wiping out billions of dollars for investors.
The settlement awaits approval by a judge. If approved, Terraform Labs will be required to return $3.58 billion in profits deemed illegal by the SEC, along with a hefty $420 million civil penalty.
Do Kwon, the founder of Terraform Labs, faces his own legal battles related to the crash. While not included in the SEC settlement, he is still subject to a separate civil lawsuit and extradition efforts from South Korea. His current location remains unknown.
This settlement marks a major turning point in the aftermath of the UST and LUNA collapse. It signifies increased scrutiny from regulators towards the cryptocurrency industry and could pave the way for stricter enforcement actions in the future.
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