The Settlement Between Terraform Labs and the SEC: What You Should Know 🚀
Terraform Labs and its founder, Do Kwon, have reached a tentative settlement with the U.S. Securities and Exchange Commission (SEC) after being accused of misleading cryptocurrency investors before the collapse of TerraUSD in 2022. The settlement details remain undisclosed, with the SEC alleging that Kwon and Terraform Labs misled investors about TerraUSD’s stability in 2021 and falsely claimed that Terraform’s blockchain was being used in a popular Korean mobile payment app.
The Impending Settlement
- A jury found Kwon and Terraform Labs liable on civil fraud charges in April, leading to the current settlement negotiations.
- US District Judge Jed Rakoff in Manhattan has set a deadline of June 12 for both parties to file papers supporting the settlement.
- The collapse of TerraUSD and Luna in May 2022 had a significant impact on the market, with investors losing over $40 billion.
As the legal battle continues, here is what you need to know:
Disputed Penalties and Denials
- The SEC requested that Kwon and Terraform Labs relinquish $5.3 billion from stablecoin sales and pay fines totaling $520 million.
- Kwon and Terraform Labs argued for significantly lower fines, with Kwon denying any wrongdoing despite facing criminal charges in the US and South Korea.
- Kwon’s arrest in Montenegro in March 2023 has further complicated the legal proceedings, with extradition to the US or South Korea on the table.
Market Reactions and Community Response
- The crypto community has expressed mixed reactions to the settlement, questioning how Terraform Labs plans to return the lost funds.
- News of the settlement has influenced market movements, with LUNA experiencing significant volatility in the past 24 hours.
As the industry watches closely, the finalization and submission of the settlement terms by mid-June will be a pivotal moment for Terraform Labs and its founder.
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