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Cryptocurrency firm Terraform will pay a $4.5 billion SEC fine
Photo: Police officers escort Terraform Labs co-founder Do Kwon after serving a sentence for forgery of documents, in Podgorica, Montenegro, March 23, 2024. (Stevo Vasiljevic) (Reuters)
Crypto firm Terraform Labs and its co-founder Do Kwon did just that agreed to pay $4.47 billion to settle a civil lawsuit brought by the U.S. Securities and Exchange Commission, Bloomberg reports.
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The lawsuit followed the company’s collapse in 2022, which resulted in the loss of $40 billion in investor assets and had a significant impact on the cryptocurrency world. Following the news, Terraform’s LUNA token surged more than 10% to around $0.58, according to CoinMarketCap.
Kwon, once considered a cryptocurrency king, was arrested in March 2023 for forging travel documents while attempting to leave Montenegro, a southern European country. He is now awaiting extradition to the United States or South Korea, where he will face potential charges.
The SEC has filed a lawsuit against Terraform and Kwon regarding the deceptive promotion and sale of crypto tokens, specifically the algorithmic stablecoin TerraUSD (UST).
The TerraUSD (UST) stablecoin was tied to the Terra (LUNA) cryptocurrency, which meant that $1 UST was always worth $1 Luna USD. However, in May 2022, LUNA’s value plummeted from over $120 per coin to near zero, causing a loss of over $50 billion in UST/LUNA market capitalization and triggering a collapse that has it wiped out $400 billion in value from the broader cryptocurrency market.
The situation worsened when FTX also collapsed in the same year.
The financial regulator accused Terraform and its co-founder Kwon of offering crypto assets that were not properly registered and misleading investors about their investment potential and stability. The SEC asked Kwon to disclose all of his financial accounts and assets.
In addition to Kwon, US authorities have cracked down on a number of individuals involved in crypto fraud this year, including Sam Bankman-Fried of FTXFounder of Binance Changpeng ZhaoAND “Bitcoin Jesus” Roger Ver.