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Terra Labs Settles with SEC for $4.47B (Do Kwon Banned)

source-logo  coinedition.com 13 June 2024 11:25, UTC

Terraform Labs, the company responsible for the implosion of the TerraUSD stablecoin and its sister token LUNA, has agreed to a $4.47 billion settlement with the U.S. Securities and Exchange Commission.

The firm and its founder, Do Kown, held accountable for the 2022 collapse of the Terra ecosystem thereby wiping off billions from the crypto sector in 2022, previously faced multiple charges from the SEC.

Terraform Labs will pay the SEC to compensate investors who lost approximately $40 billion in the stablecoin ecosystem’s collapse. The judgment, filed Wednesday in Manhattan Federal Court, awaits approval from the U.S. District Judge, Jed Rakoff.

The judgment includes $4.05 billion in disgorgement plus interest and a $420 million civil fine. However, since Terraform Labs filed for bankruptcy in January, the firm is unlikely to be able to pay the substantial fine. As a result, the sum will become an unsecured claim in the Chapter 11 case, where Terraform is currently undergoing liquidation.

“Entry of this judgment would ensure the maximal return of funds to harmed investors and put Terraform out of business for good,” the SEC said in a court filing while adding:

Thus, this proposed judgment is fair, reasonable, and in the public interest.”

In addition to Terraform Labs’ $4.47 billion payment, Do Kwon must pay an $80 million civil fine and is barred from participating in crypto transactions. He is also required to transfer around $204 million to the Terraform bankruptcy estate.

While news of the settlement initially broke out in early June, the official documentation and fines were revealed on Wednesday during the filing process; the price of LUNA rose as a result.

Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.

coinedition.com