Terraform Labs Resolves SEC Dispute by Paying 447 Billion
Terraform Labs has come to an agreement with the U.S. Securities and Exchange Commission (SEC) to pay a hefty sum of $4.47 billion, putting an end to a major dispute. This settlement stems from the Terra ecosystem’s collapse in 2022, resulting in a $40 billion market loss.
Terraform Labs Agrees to Pay Almost $4.5 Billion in SEC Settlement
The SEC has sought court approval for a final consent judgment in its case against Terraform Labs and its former CEO, Do Kwon.
In a filing on Wednesday, it was revealed that the U.S. securities regulator and Terraform Labs have reached a deal, requiring the former stablecoin issuer to pay nearly $4.5 billion. This amount includes around $3.5 billion for disgorgement, over $460 million for prejudgment interest, and a $420 million civil penalty.
Furthermore, Kwon will contribute $200 million to the Terraform bankruptcy estate. The company had filed for bankruptcy earlier this year ahead of its legal battle against the SEC.
The SEC emphasized that the imposed penalties, including the $420 million and Kwon’s $80 million, are completely justified and fall within legal boundaries.
It made clear that these penalties serve as a strong deterrent for others who may contemplate engaging in similar deceptive activities. The SEC stressed that despite any short-term gains from such schemes, wrongdoers will ultimately be held accountable. The severity of these penalties was deemed appropriate, especially in light of the trial evidence demonstrating significant losses suffered by investors due to the defendants’ fraudulent behavior.
The SEC stated, “The proposed consent judgment effectively addresses the scale of this fraud by imposing substantial remedial, punitive, and deterrent measures, including a multi-billion-dollar judgment against the Defendants, and ensures meaningful and swift recovery for investor victims who collectively lost billions when the Defendants’ scheme collapsed.”
Earlier this year, following a brief trial, Terraform and Kwon were found guilty of orchestrating one of the most significant securities frauds in U.S. history.
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