Breaking News Terraform led by Do Kwon Settles SEC Case with 447 Billion Fine

Do Kwon’s Terraform to Pay Record $4.47 Billion Fine in SEC Case


By Hassan Shittu
Updated: June 12, 2024 14:37 EDT
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3 min read


In a groundbreaking decision, Terraform Labs, along with its founder Do Kwon, has agreed to settle with the United States Securities and Exchange Commission (SEC) by paying a fine of $4.47 billion.
This agreement comes after a lengthy legal battle and negotiations that followed the collapse of the Terra-Luna stablecoin ecosystem, which resulted in a staggering $40 billion loss in the crypto market.
Initially found guilty of fraud in connection to the Terra-Luna crash, Terraform Labs and Do Kwon attempted to reduce the fines to $1 million through legal efforts. However, the SEC stood firm on seeking billions in penalties. The settlement reached today includes a substantial financial penalty but may help avoid prolonged legal disputes and further sanctions.
Terraform Labs and Do Kwon Agree to Pay $4.47 Billion Fine
Terraform Labs and its founder, Do Kwon, have agreed to a $4.47 billion fine in their settlement with the SEC, as reported in a recent post on X. This agreement follows intense legal battles and significant developments over the past months.
The settlement includes disgorgement fines of approximately $3.6 billion, a civil penalty of $420 million, and nearly $467 million in prejudgment interest. Additionally, Do Kwon is responsible for $110 million in disgorgement penalties and about $14.3 million in prejudgment interest fines as per the terms of the settlement.


The SEC settlement documents. Source: Court Listener
The settlement filing also mandates the transfer of all crypto assets from the Luna Foundation Guard and PYTH token holdings from Do Kwon to cover the disgorgement fines and prejudgment interest. Any surplus from the sale of these assets will go towards paying the civil penalty fines.


Page 8 of the settlement. Source: Court Listener
On April 30, Terraform Labs and Do Kwon’s legal team contested the SEC’s proposed $5.3 billion fine, advocating for a significantly reduced penalty of $1 million.
Following the Terra-Luna collapse, the SEC initially sought a $4.7 billion disgorgement and prejudgment fine, along with $520 million in civil penalties. The crash, which occurred in early April, resulted in substantial financial losses and increased regulatory scrutiny on the company.
Despite their arguments, the SEC persisted in pursuing substantial fines, reflecting its broader strategy of enforcing compliance in the crypto sector.
The SEC’s actions against Kwon and Terraform Labs were triggered by the collapse of their algorithmic stablecoins, TerraUSD and Luna, which led to approximately $40 billion in losses in the cryptocurrency market in the spring of 2022.
A Possible Settlement Earlier
In May, Terraform Labs and Do Kwon had reached a potential settlement in principle with the SEC, but court records indicated that an oral argument scheduled for late May was canceled. The final agreement reached today includes a significant financial penalty of $4.47 billion but avoids further legal battles.
SEC Chair Gary Gensler emphasized the significance of this case in establishing a precedent for regulatory compliance in the crypto industry in a statement in February 2023, stating,
Notably, Brian Curran, former head of communications at Terraform, revealed in a court testimony on April 2 that handling public relations for the company made him “angry.”
Curran alleged that he tried to be transparent to users while doing PR for Terraform, but the company consistently asked him to craft false posts. He also disclosed that working with Do Kwon, Terraform’s embattled founder, was challenging.
“As I was fairly angry, because I realized that he had attempted to deceive me, to write a post that he knew to be false,” Curran stated in the report.
As it stands now, Terraform has admitted guilt and validated Gary Gensler’s accusations. At the time of writing, Kwon remains detained in Montenegro and faces potential extradition to the U.S. or South Korea.
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