💥Terraform Labs and Do Kwon Reach Settlement with SEC Over TerraUSD Crash
Terraform Labs and its founder Do Kwon have reached a settlement with the U.S. Securities and Exchange Commission (SEC) over fraud charges related to the TerraUSD (UST) crash in 2022. The SEC accused Terraform Labs and Kwon of misleading investors about the stability of TerraUSD and making false claims about the use of the blockchain. According to court records, Kwon and his company are accused of misleading investors by claiming that TerraUSD would remain at a stable value in 2021. The collapse of TerraUSD and Luna led to a massive decline in cryptocurrency markets, causing investors to lose more than $40 billion.
Details of the settlement have not yet been made public, but the SEC required Terraform Labs and Kwon to repay $5.3 billion, with the company paying a $420 million penalty and Kwon paying a $100 million penalty. Kwon and Terraform Labs stated that these penalties were too high and suggested a maximum penalty of $3.5 million for the company and less than $1 million for Kwon. Kwon faces similar charges in the United States and South Korea, and both countries are requesting his extradition.