Terraform Labs and its former CEO Do Kwon have reached an agreement with the Securities and Exchange Commission to pay $4.5 billion in a massive settlement deal. This comes after they were found liable for civil fraud charges related to the collapse of UST and LUNA in 2022. The settlement includes paying back ill-gotten gains, a hefty civil penalty, and a prohibition on engaging in crypto asset securities transactions in the future, marking a significant development in the aftermath of the Terra blockchain implosion.
As part of the settlement, Kwon and Terraform Labs will also be required to pay additional monetary relief, with Kwon personally responsible for millions as a deterrent measure. The funds will be transferred from Kwon to Terraform Labs’ bankruptcy estate, pending approval by Judge Jed Rakoff. The fallout from the collapse of UST and LUNA triggered a series of crypto-related blowups that ultimately led to the collapse of the FTX crypto exchange, highlighting the far-reaching consequences of the instability within the crypto industry.
Despite the ongoing legal battles and extradition appeals, Kwon remains in custody in Montenegro, facing charges of fraud by both the U.S. Department of Justice and South Korean authorities. His release from prison months ago did not mark the end of his legal woes, as the uncertainty surrounding his next destination persists until a final determination is made. The saga of Do Kwon serves as a cautionary tale in the world of cryptocurrency, emphasizing the need for accountability and responsibility in a rapidly evolving and largely unregulated sector.
