Terraform Agrees to Pay $4.47 Billion in Proposed Judgment with SEC

Bittime - Terraform Labs agreed to pay a $4.47 billion fine to the SEC related to the impairment of its stable algorithm. This decision includes reparations for victim investors and sanctions against founder Do Kwon.

Terraform Agrees to Pay $4.47 Billion

After reaching a settlement with the US Securities and Exchange Commission regarding the drastic decline in the value of its stable algorithm back in 2022, Terraform Labs finally agreed to pay a $4.47 billion fine. On Wednesday, the Securities and Exchange Commission filed a proposed final consent decree asking Judge Jed Rakoff of the U.S. District Court for the Southern District of New York to approve the plan.

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SEC Declares Consent Judgment

In court filings, the SEC stated that the proposed consent judgment would address the scale of this fraud by implementing significant remedial, punitive, and deterrence efforts, including multibillion-dollar judgments against Defendants. This ruling will also provide significant and speedy relief for victim investors, who collectively lost billions of dollars as a result of Defendants' failed schemes.

The proposed decision, if approved, would send a clear message of deterrence not only to those involved in unintentional violations, but also to all those who seek to circumvent federal securities laws by crafting new standards of conduct for crypto assets that fall under scope of federal securities laws.

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Terraform and Founder Do Kwon Reach Settlement with SEC

After verbal disputes were dropped, Terraform and founder Do Kwon reached an agreement in principle with the SEC in late May. The proposed ruling would require Terraform to pay $3.58 billion in civil penalties, $420 million in civil penalties, and bar Kwon from any position as a director or officer of a public company. Additionally, the SEC stated that Kwon must pay approximately $204 million for Terraform's bankruptcy estate to be distributed to aggrieved investors.

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Conclusion

As part of a settlement with the SEC regarding the impairment of its stable algorithm in 2022, Terraform Labs has agreed to pay a fine of $4.47 billion. The SEC's proposed final consent decree requires Judge Jed Rakoff to approve it. This decision will involve significant remedial, punitive, and deterrence efforts to provide a speedy recovery for investors who experienced losses.

The fine amount consists of $3.58 billion in civil penalties and an additional $420 million in civil penalties. The sanctions imposed on Do Kwon, the founder of Terraform, include a ban on serving as a director or officer of a public company and an obligation to pay $204 million to injured investors. It is hoped that this decision sends a clear message to prevent violations of federal securities laws, especially as they relate to crypto assets.

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