Bitrabo Editorial
Terraform Labs, a company based in Singapore, and its founder, Do Kwon, have come to a tentative settlement with the US Securities and Exchange Commission (SEC) in a civil fraud case, as reported by Reuters.
SEC Lawsuit Details
The SEC filed a lawsuit in February 2023 against Terraform Labs and Do Kwon, accusing them of running a large-scale crypto scam involving the sale of digital assets like LUNA and Terra USD (UST).
The regulator claimed that the defendants deceived investors about the stability of TerraUSD and falsely stated that Terraform’s blockchain was integrated into a popular Korean mobile payment app.
A recent jury decision found the defendants liable for fraud, giving the SEC a significant win in its efforts to combat fraudulent activities in the digital asset industry.
Following the verdict, the SEC sought billions of dollars in disgorgement and civil penalties from Terraform Labs and Do Kwon.
The SEC’s motion, filed on April 5, 2024, indicated that the jury sided with the SEC on all counts, seeking relief in the form of an injunction, disgorgements totaling about $4 billion, prejudgment interest of $545 million, and civil penalties of $420 million for Terraform Labs and $100 million for Do Kwon.
Restrictions and Penalties
As part of the settlement agreement, the SEC requested a conduct-based injunction that would bar Terraform Labs from engaging in crypto asset transactions or related activities. The SEC also sought an officer and director bar against Do Kwon and a declaration that any fraud-related monetary sanctions against Terraform Labs are not dischargeable in bankruptcy.
Both Terraform Labs and Do Kwon have put forth their proposed civil penalties, with Terraform Labs seeking up to $3.5 million and Do Kwon requesting $800,000 in penalties.
The settlement is pending approval from US District Judge Jed Rakoff in Manhattan, who has asked for supporting documents from both parties by June 12.
This case’s outcome could have significant implications for future regulatory actions and investor protection in the cryptocurrency space.
As of now, Terra Luna Classic (LUNC) is trading at $0.0001224, showing a nearly 5% increase in the last 24 hours.
Over the past month, the token has grown by 24% and experienced a notable 115% surge in trading volume compared to the previous day.
Image source: Shutterstock, chart from TradingView.com