Terraform Labs and its Founder, Do Kwon, have reached
a settlement with the US Securities and Exchange Commission (SEC) following
allegations of fraud surrounding the collapse of the stablecoin TerraUSD,
Reuters reported. The agreement, disclosed on a court website, arrived after a
jury found Kwon and Terraform Labs liable for civil fraud charges in April.
The SEC had accused the company and Kwon of misleading
investors in 2021 about the stability of TerraUSD, a stablecoin designed to
maintain its value to $1. Additionally, they were accused of falsely claiming
that Terraform’s blockchain was utilized in a popular Korean mobile payment
app.
The settlement, though its terms remain undisclosed,
marks a significant development in the ongoing legal saga between Terraform
Labs, Do Kwon, and the SEC. US District Judge Jed Rakoff in Manhattan has
requested supporting documents from both parties by June 12.
Initially, the SEC sought substantial penalties,
including relinquishing $5.3 billion in alleged ill-gotten gains from
stablecoin sales, fines totaling hundreds of millions of dollars, and
a ban on dealing in crypto asset securities for both Kwon and Terraform Labs.
The collapse of TerraUSD and Luna, a token closely
tied to TerraUSD, affected the cryptocurrency markets in May 2022, resulting in
an estimated loss of over $40 billion for investors. Despite the settlement,
Kwon still faces related criminal charges in both the US and South Korea,
though he maintains his innocence.
Kwon’s extradition saga recently took a new turn after
Montenegro’s Court of Appeal referred the case back to the High Court for
retrial. This action followed arguments from Kwon’s lawyers that questioned the
validity of the initial ruling.
Kwon’s Extradition Remains Uncertain
The decision to extradite Kwon was returned to the High Court in Montenegro after the
Court of Appeal granted an appeal by his legal team. The Court of Appeal
accepted the arguments presented by Kwon’s lawyers, canceling the previous
decision by the High Court and mandating a retrial.
The initial ruling from the High Court in Podgorica,
dated April 8, 2024, allowed for Kwon’s extradition but was criticized for
lacking decisive facts and valid reasons. The High Court must now ensure that
Kwon’s consent to extradition is voluntary, informed, and irrevocable.
The US has requested Kwon’s
extradition, filing eight charges against him and expressing a willingness to
prosecute him in absentia. Kwon disappeared from
the public eye following the catastrophic collapse of TerraUSD and Luna
cryptocurrencies in 2022, which wiped out nearly $37 billion from the crypto
market and led to several bankruptcies. He was later arrested in Montenegro.
Terraform Labs and its Founder, Do Kwon, have reached
a settlement with the US Securities and Exchange Commission (SEC) following
allegations of fraud surrounding the collapse of the stablecoin TerraUSD,
Reuters reported. The agreement, disclosed on a court website, arrived after a
jury found Kwon and Terraform Labs liable for civil fraud charges in April.
The SEC had accused the company and Kwon of misleading
investors in 2021 about the stability of TerraUSD, a stablecoin designed to
maintain its value to $1. Additionally, they were accused of falsely claiming
that Terraform’s blockchain was utilized in a popular Korean mobile payment
app.
The settlement, though its terms remain undisclosed,
marks a significant development in the ongoing legal saga between Terraform
Labs, Do Kwon, and the SEC. US District Judge Jed Rakoff in Manhattan has
requested supporting documents from both parties by June 12.
Initially, the SEC sought substantial penalties,
including relinquishing $5.3 billion in alleged ill-gotten gains from
stablecoin sales, fines totaling hundreds of millions of dollars, and
a ban on dealing in crypto asset securities for both Kwon and Terraform Labs.
The collapse of TerraUSD and Luna, a token closely
tied to TerraUSD, affected the cryptocurrency markets in May 2022, resulting in
an estimated loss of over $40 billion for investors. Despite the settlement,
Kwon still faces related criminal charges in both the US and South Korea,
though he maintains his innocence.
Kwon’s extradition saga recently took a new turn after
Montenegro’s Court of Appeal referred the case back to the High Court for
retrial. This action followed arguments from Kwon’s lawyers that questioned the
validity of the initial ruling.
Kwon’s Extradition Remains Uncertain
The decision to extradite Kwon was returned to the High Court in Montenegro after the
Court of Appeal granted an appeal by his legal team. The Court of Appeal
accepted the arguments presented by Kwon’s lawyers, canceling the previous
decision by the High Court and mandating a retrial.
The initial ruling from the High Court in Podgorica,
dated April 8, 2024, allowed for Kwon’s extradition but was criticized for
lacking decisive facts and valid reasons. The High Court must now ensure that
Kwon’s consent to extradition is voluntary, informed, and irrevocable.
The US has requested Kwon’s
extradition, filing eight charges against him and expressing a willingness to
prosecute him in absentia. Kwon disappeared from
the public eye following the catastrophic collapse of TerraUSD and Luna
cryptocurrencies in 2022, which wiped out nearly $37 billion from the crypto
market and led to several bankruptcies. He was later arrested in Montenegro.
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- Source: https://www.financemagnates.com//cryptocurrency/do-kwon-and-terraform-labs-reach-settlement-with-sec-in-civil-fraud-case-report/
