LUNA Price Soars Following Terraform Labs’ Resolution with SEC

Terraform Labs and its co-founder, Do Kwon, have reached a preliminary agreement with the U.S. Securities and Exchange Commission (SEC) in a civil fraud case. The SEC had previously accused Terraform and Kwon of misleading investors about the stability of their products, leading to the collapse of their $40 billion ecosystem in May 2022.

According to a recent court filing, a conference was held on May 29, where all parties agreed to settle the case, resulting in the cancellation of previously scheduled oral arguments. The parties are now expected to file the settlement documentation by June 12 and present it before Judge Jed S. Rakoff.

The announcement of the settlement had a significant impact on the market, particularly on Terraform’s LUNA token, which experienced a substantial surge of up to 38%—the highest it has been since April 12. This surge in value indicates investor optimism following the settlement news. Moreover, the expectation of resolving Terraform Labs’ legal uncertainties has brought temporary relief and optimism to stakeholders and investors.

However, while progress is being made in settling the civil case with the SEC, Do Kwon’s legal troubles are far from over. Currently, Kwon is out on bail in Montenegro, awaiting extradition to either the U.S. or South Korea, where he faces additional criminal charges. Additionally, the SEC initially proposed a hefty $5.3 billion penalty to resolve the fraud case, which would be the largest fine imposed on a crypto project.

Amidst the bankruptcy proceedings, Terraform Labs is contesting the penalty, arguing for a more suitable civil fine considering its remaining assets amount to approximately $150 million. As the legal battle continues, Kwon’s future remains uncertain, with significant implications for him and the wider cryptocurrency market.

Tags: Crypto Regulations