Terraform Labs and Founder Do Kwon Tentatively Settle with SEC

The U.S. Securities and Exchange Commission (SEC) and Singapore-based Terraform Labs, together with its founder Do Kwon, have agreed a provisional settlement. Accusations of deceiving investors before the 2022 collapse of the TerraUSD stablecoin are addressed by the settlement.

The specifics of the settlement are yet unknown, according to court filings that Reuters quoted. But a jury has already determined that Kwon and Terraform Labs are accountable for civil deception.

Allegations and Community Reactions

The SEC accused Terraform Labs and Kwon of deceiving investors in 2021 about the stability of TerraUSD, which was supposed to maintain its value at $1. Additionally, they allegedly misrepresented that Terraform’s blockchain was used in a popular Korean mobile payment app.

On the implications of the settlement, the crypto community is divided. While some think it would have a beneficial impact on the price of Terra Classic (LUNC), others are still dubious about the company’s intentions to repay the money.

The SEC previously ordered that Kwon and Terraform Labs give up $5.3 billion in profits they claimed to have gained illegally from the sale of stablecoins. In addition, the SEC requested that Kwon and the corporation pay $100 million in fines and refrain from trading in “crypto asset securities.”

According to CoinMarketCap, LUNC increased by more than 9% to $0.00012 after the settlement was announced, while LUNA, the new token, increased by more than 13%.

The SEC estimates that investor losses from the collapse of TerraUSD and Terra Classic in May 2022 were over $40 billion, severely disrupting the cryptocurrency markets. Kwon and his business advocated for far smaller fines, proposing that Terraform Labs pay a maximum punishment of $3.5 million and Kwon pay less than $1 million.

Kwon, who is being prosecuted in South Korea and the United States, disputes any wrongdoing. He was detained in March 2023 in Montenegro and is still awaiting extradition.