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Terraform Labs’ $4.55 Billion SEC Settlement

Crypto Enforcement | Jun 13, 2024

Pixabay WilliamCho Justice scales - Terraform Labs' $4.55 Billion SEC Settlement

Image: Pixabay/WilliamCho

Terraform Labs Settles SEC Fraud Case with $4.55 Billion Penalty

One of the biggest fines in SEC history, $4.55 billion, will be paid by Terraform Labs and its creator, Do Kwon, as part of a settlement with the Securities and Exchange Commission (SEC) on fraud charges.

  • Do Kwon launched Terraform Labs, which created the stablecoin TerraUSD. The stablecoin crashed in May 2022, causing an estimated $40 billion in damages for investors.
  • The SEC charged Terraform Labs with misrepresenting the dangers to investors and offering unregistered securities while making false claims regarding the stability of TerraUSD.

See:  SEC Scrutinizes Terraform’s $166M Transfer to Dentons

  • A $420 million civil punishment for Terraform and a $80 million civil fine for Do Kwon are included in the $4.55 billion settlement, along with $4.05 billion in disgorgement and interest.
  • In accordance with the resolution, Terraform must also shut down operations and apply for approval of a Chapter 11 liquidation plan. A trustee will be chosen to oversee any residual assets and make payments to investors and creditors.
  • The need for cryptocurrency companies to adhere to financial regulations, transparency and truthful portrayal of financial products and services to prevent deceiving investors are among the most important lessons learned.

Do Kwon, who was detained and found guilty in Montenegro in 2023 of trying to travel with a forged passport. Since then, officials in Montenegro have been debating with the institution over whether to extradite the disgraced former crypto mogul to South Korea or the United States.

Closing Outlook

As regulators around the world scrutinize digital assets, companies must prioritize compliance and transparency to foster a trustworthy market environment.

NCFA Jan 2018 resize - Terraform Labs' $4.55 Billion SEC SettlementThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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