Home Finance News Terraform Labs and Do Kwon settle SEC fraud case for $4.5 billion.

Terraform Labs and Do Kwon settle SEC fraud case for $4.5 billion.

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Terraform Labs and Do Kwon settle SEC fraud case for $4.5 billion.

Terraform Labs and its former CEO Do Kwon have agreed to a historic $4.5 billion settlement following the $40 billion collapse of UST and LUNA in 2022. The SEC found Kwon and the company liable for civil fraud charges, citing misleading investors about the stability of the Terra blockchain before its implosion. The agreement also includes a $420 million civil penalty and a prohibition on engaging in crypto asset securities transactions moving forward.

Do Kwon will personally pay $204 million in monetary relief as part of the settlement, which the SEC hopes will serve as a strong deterrent message. The funds will be transferred to Terraform Labs’ bankruptcy estate, pending approval by Judge Jed Rakoff of the U.S. District Court Southern District of New York. The collapse of UST and LUNA in 2022 triggered a series of crypto-related blowups, including the collapse of FTX, due to the unstable nature of the algorithmic stablecoin’s value pegged to the dollar. Do Kwon’s extradition to either the U.S. or South Korea remains in limbo as he continues to battle legal challenges in Montenegro.

Despite being released from prison in Montenegro after serving a four-month sentence, Do Kwon’s legal troubles are far from over. He faces fraud charges by the U.S. Department of Justice and financial crime allegations in South Korea, including fraud, bribery, and manipulating transaction volume. The fallen crypto mogul may remain in the region until a final decision is reached regarding his extradition. The saga of Kwon and Terraform Labs serves as a cautionary tale in the volatile world of cryptocurrency, with regulatory authorities cracking down on fraudulent activities to protect investors and maintain market integrity.

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