Terraform Labs Reaches Multi-Billion Dollar Settlement with SEC

Terraform Labs has reached a $4.47 billion settlement with the U.S. Securities and Exchange Commission (SEC) over the collapse of TerraLuna (LUNC) and TerraUSD (UST). This agreement comes after a two-week trial in March and a preliminary deal disclosed last month. A jury found both Terraform Labs and its founder, Do Kwon, legally responsible for the company’s downfall in 2022.

Legal Consequences and Financial Penalties

The settlement, pending approval from a New York judge, could become one of the largest between a cryptocurrency entity and a U.S. regulator. The SEC had initially aimed for $5.3 billion in fines from both Terraform Labs and Kwon. Federal prosecutors argued for $4.7 billion in disgorgement along with $520 million in civil penalties.

Do Kwon is also facing extradition from the Balkans, with potential removal to either the U.S. or South Korea. His sentence for travel document fraud expired in March, and he has been under house arrest in Montenegro since his release from Spuž prison. Kwon had been evading authorities following Terra’s catastrophic $60 billion collapse, which had severe repercussions throughout the digital asset industry.

Extradition approvals have been granted and overturned multiple times amid legal wrangling in Montenegro. The final decision on Kwon’s extradition destination remains uncertain. The former crypto magnate may face extensive prison time for his involvement in Terra’s downfall.