Bittime – Terraform Labs and its founder, Do Kwon, have reached a tentative settlement with the US Securities and Exchange Commission (SEC) over accusations of misleading crypto asset investors, resulting in the collapse of the TerraUSD stablecoin in 2022. The agreement was disclosed via the court's website on Thursday, though details remain confidential.
In April, a jury found Kwon and Terraform Labs liable on civil fraud charges. The SEC has accused them of misleading investors in 2021 by falsely promoting the stability of TerraUSD and claiming that the Terraform blockchain was used in a popular mobile payment app in Korea.
Also read: Do Kwon is worried about his extradition to the United States
What is TerraUSD?
TerraUSD is a stablecoin created by Singapore-based Terraform Labs, designed to maintain a consistent value of $1. It is part of a larger ecosystem that includes other crypto assets such as Luna, which fluctuates in value but is closely related to TerraUSD.
Also read: The Conspiracy Behind the Fall of the Terra Luna Project
Judge's order in Manhattan
U.S. District Judge Jed Rakoff in Manhattan has ordered both sides to file documents supporting the deal by June 12. Neither SEC spokespeople nor attorneys representing the defendants declined to comment on the matter.
The crash of TerraUSD and Luna in May 2022 rocked the crypto asset market, causing significant losses for investors. The SEC estimates more than $40 billion was lost when TerraUSD failed to maintain its link to the dollar.
Check Today's Crypto Market:
Fantastic Compensation Costs! Reach $5.3 Billion!
In court documents, the SEC seeks to force Kwon and Terraform Labs to return $5.3 billion it deems to be ill-gotten gains from stablecoin sales. Additionally, the SEC also proposed a fine of $420 million for the company, $100 million for Kwon, and a ban on both of them from dealing in “crypto assets.”
Also read : The Fall of Terra: The Shadow of a $5.3 Billion Fine Looking at Do Kwon for the UST Tragedy?
Kwon and his company argued that the maximum fine that could be imposed was $3.5 million for Terraform Labs and less than $1 million for Kwon. Kwon also faces related criminal charges in the US and South Korea, which he has denied. Since his arrest in Montenegro in March 2023, there has been ongoing debate regarding Kwon's extradition, with Montenegrin authorities yet to decide on the purpose of his extradition.
Also Read How To Buy Crypto:
This Temporary Agreement is Quite Significant for the Do Kwon vs SEC Case
This temporary agreement is a significant development after one of the biggest disruptions in the crypto asset market. This resolution has the potential to influence future regulatory actions and the stability of the crypto asset ecosystem more broadly.
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DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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