Terraform Labs and Do Kwon Reach Settlement with SEC
Here is a quick summary of the latest developments:
- Terraform Labs and its co-founder, Do Kwon, have reached a “settlement in principle” with the SEC in a civil case alleging fraud.
- The settlement follows a Manhattan jury finding Terraform Labs and Kwon liable for misleading investors about their products.
- There was a dispute over the penalty amount, with the SEC seeking $5.3 billion and Terraform Labs arguing for $1 million.
- The settlement terms are yet to be finalized and await court approval by June 12, 2024.
- Do Kwon is currently under bail in Montenegro, facing extradition to the U.S. or South Korea for criminal charges.
Overview of the Legal Dispute
In the ongoing legal battle concerning Terraform Labs and its co-founder, Do Kwon, a “settlement in principle” has been reached with the U.S. Securities and Exchange Commission (SEC) in a fraud case.
The agreement comes after a jury ruling that found Terraform Labs and Kwon guilty of misleading investors about the stability of their algorithmic stablecoin and associated token.
The collapse of Terraform Labs in May 2022 had significant repercussions in the crypto industry, leading to losses for investors.
Subsequently, the SEC filed a case against Terraform Labs and Kwon, accusing them of offering unregistered securities and making false claims.
Details of the settlement agreement emerged from a court filing that mentioned a recent telephone conference attended by all involved parties.
As a result of the agreement, oral arguments were canceled, and the parties are required to submit documentation supporting the settlement to Judge Jed S. Rakoff by a specified date.
Following the prior verdict, the SEC had initially proposed a hefty penalty of $5.3 billion, while Terraform Labs argued for a much lower amount of $1 million and contested disgorgement from certain affiliated entities.
Aside from financial penalties, the SEC also sought restrictions on Do Kwon’s future roles and full disclosure of his financial accounts, which Kwon resisted on Fifth Amendment grounds.
Market Response and Ongoing Legal Challenges
The news of the settlement had an immediate impact on the crypto market, with Terra’s token witnessing a significant surge in value.
Despite this milestone in the legal case, Do Kwon continues to grapple with legal issues as he awaits extradition from Montenegro to face charges in the U.S. or South Korea.
Hot Take: Wrapping Up the Saga
Here’s what you need to know about the latest developments:
- A settlement in principle has been reached between Terraform Labs, Do Kwon, and the SEC in a civil fraud case.
- This resolution comes after earlier legal proceedings found Terraform Labs and Kwon guilty of misleading investors.
- The financial penalties and terms of the settlement are yet to be finalized and await court approval.
- Do Kwon’s legal troubles persist as he remains under bail in Montenegro, facing extradition to the U.S. or South Korea for criminal charges.
Stay tuned for further updates on this evolving legal saga in the crypto world.
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