Terraform Labs, Do Kwon reach preliminary deal with SEC in TerraUSD case

The
U.S.
Securities
and
Exchange
Commission
and
Terraform
Labs,
along
with
Do
Kwon,
have
reached
a
preliminary
settlement
concerning
charges
of
misleading
investors
about
TerraUSD.

Singapore-based
Terraform
Labs
and
its
founder
Do
Kwon
have
reached
a
tentative
settlement
with
the
U.S.
Securities
and
Exchange
Commission
(SEC)
regarding
accusations
of
misleading
crypto
investors
before
the
2022
collapse
of
the
TerraUSD
stablecoin.

As
per

Reuters,
which
cites
court
documents,
the
terms
of
the
deal
aren’t
yet
clear,
although
a
jury
earlier
found
Kwon
and
Terraform
Labs
liable
on
civil
fraud
charges.

The
SEC
accused
Terraform
Labs
and
Kwon
of
deceiving
investors
in
2021
about
the
stability
of
TerraUSD,
a
stablecoin
designed
to
maintain
its
value
at
$1.
The
regulator
also
alleged
that
Kwon
and
the
firm
falsely
claimed
Terraform’s
blockchain
was
used
in
a
popular
Korean
mobile
payment
app.

The
crypto
community
appears
to
be
divided
on
the
settlement’s
implications.
Some
anticipate
a
positive
impact
on
Terra
Classic’s
(LUNC)
price,
while

others

question
how
the
firm
plans
to
return
the
money.

Previously,
the
SEC
demanded
that
Kwon
and
Terraform
Labs

forfeit
$5.3
billion
in
alleged
ill-gotten
gains
from
stablecoin
sales.
It
also
sought
fines
of
$420
million
for
the
company
and
$100
million
for
Kwon,
along
with
bans
on
dealing
in
“crypto
asset
securities.”

Following
the
news,
LUNC
surged
over
9%
to
$0.00012,
and
the
new
token,
LUNA,
gained
over
13%,
according
to
CoinMarketCap.

The
collapse
of
TerraUSD
and
Terra
Classic

disrupted
cryptocurrency
markets
in
May
2022,
with
the
SEC
estimating
that
investors
lost
over
$40
billion.
Kwon
and
his
company
argued
that
the
maximum
fines
should
be
$3.5
million
for
Terraform
Labs
and
less
than
$1
million
for
the
TerraUSD
mastermind.

Kwon,
who
faces
criminal
charges
in
the
U.S.
and
South
Korea,
denies
any
wrongdoing.
Arrested
in
March
2023,
he
is
still
awaiting
extradition
from
Montenegro.