Terraform Labs to Settle SEC Dispute with $4.47 Billion Payment
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Terraform Labs has reached an agreement with the U.S. Securities and Exchange Commission (SEC) to pay $4.47 billion, resolving a significant dispute. This comes from the $40 billion market loss in 2022 caused by the Terra ecosystem collapse.
Terraform Labs to Pay Nearly $4.5 Billion in SEC Settlement
The Securities and Exchange Commission has requested court approval for a final consent judgment in its case against Terraform Labs and former CEO Do Kwon.
The Wednesday filing reveals an agreement between the US securities regulator and Terraform Labs, stipulating a nearly $4.5 billion payment by the former stablecoin issuer. This amount includes approximately $3.5 billion in disgorgement, over $460 million in prejudgment interest, and $420 million as a civil penalty.
Additionally, Kwon will contribute $200 million to the Terraform bankruptcy estate. The company declared bankruptcy earlier this year ahead of its trial against the SEC.
The regulator stated that the penalties it imposed, including the $420 million and Kwon’s $80 million, are fully justified and within legal limits.
It pointed out that the penalties serve as a strong warning to others who might consider engaging in similar deceptive activities, stressing that regardless of any short-term profits from such schemes, perpetrators will ultimately be held accountable. The SEC highlighted that the severity of these penalties is appropriate, especially considering the trial evidence of substantial losses suffered by investors due to the defendants’ fraudulent actions.
The SEC said, “The proposed consent judgment both addresses the magnitude of this fraud by imposing significant remedial, punitive, and deterrent remedies, including a multi-billion-dollar judgment against Defendants, and provides for meaningful and speedy recovery for investor victims that collectively lost billions when Defendants’ scheme collapsed.”
Earlier this year, after a brief trial, Terraform and Kwon were found guilty of deliberately and carelessly executing one of the most significant securities frauds in U.S. history.