News Update: Terraform Labs and Do Kwon Reach Settlement with SEC
Julia Smith
Last updated:
May 30, 2024 13:00 EDT
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2 min read
New court documents have revealed that Terraform Labs and Do Kwon have agreed to settle their case with the United States Securities and Exchange Commission (SEC).
According to court records, the scheduled oral argument between Do Kwon, Terraform Labs, and the SEC on May 29 was canceled because the parties reached a settlement in principle.
Both parties have until June 12 to submit papers to finalize the agreement.
Initially, the SEC proposed a $5.3 billion fine against Kwon and Terraform Labs. However, Kwon contested the fine, requesting a maximum penalty of $1 million.
Furthermore, the SEC requested a ban on Kwon from serving as a securities officer and director of any securities issuer, along with the requirement for him to surrender personal accounts. Kwon’s lawyers argued that this would violate his 5th amendment rights.
This settlement news comes a month after Kwon was found liable for causing a $40 billion loss in cryptocurrency markets due to the collapse of his algorithmic stablecoins, Terra and Luna, in May 2022.
In February 2023, SEC Chair Gary Gensler stated that Terraform and Do Kwon failed to provide full and truthful disclosure to the public, alleging fraud and misleading statements that resulted in significant losses for investors.
Following the announcement of the settlement, the price of Terra surged by over 16.5%.
Meanwhile, Kwon is currently being held in Montenegro as both the US and South Korea seek his extradition. He was originally arrested in March 2023 for falsifying travel documents while attempting to flee.
Earlier this month, Montenegro’s Appellate Court halted the potential extradition following an appeal from Kwon’s lawyers. The decision is now under review by the country’s High Court.
If approved, this settlement will bring an end to the legal dispute between the SEC, Kwon, and Terraform Labs. The details of the settlement have not been made public.
