Terraform Labs is to pay $4.47 billion to settle with the US Securities and Exchange Commission (SEC).
The SEC sued Terraform Labs and its former CEO Do Kwon after the firm’s collapse in 2022.
Terraform Labs has agreed to a $4.47 billion settlement with the US Securities and Exchange Commission (SEC).
The news follows an earlier report that Terraform Labs and its founder and former CEO Do Kwon had reached agreement over a settlement.
On Wednesday, it emerged that the company had agreed to pay the hefty $4.47 billion as part of the resolution of a fraud case the SEC filed after the firm’s implosion in 2022.
The SEC filed its lawsuit in February last year and in April, it emerged the regulator sought $5.3 billion from Terraform Labs and Do Kwon.
The $4.47 billion settlement awaits court approval.
Terraform Labs/SEC agreement
According to court filings, Terraform Labs will pay approximately $3.5 billion as disgorgement, $460 million in prejudgment interest, and $420 million in civil penalties.
The firm’s former CEO Kwon is also to pay just over $200 million, this going to the Terraform Labs bankruptcy estate.
“Payment of the monetary remedies against Kwon shall be deemed satisfied, provided that all transfers by Kwon to the SEC and the Terraform bankruptcy estate in the Bankruptcy Case total no less than $204,320,196, excluding the value of any Terraform Crypto Assets transferred to the Terraform bankruptcy estate, only if and until Kwon completes: (1) transferring into an escrow account agreed by Kwon and the Commission staff $4,700,000 within 30 days of Final Judgment,” the settlement reads in part.
Terraform Labs’ collapse in 2022 saw massive contagion across the crypto industry, with billions of dollars wiped from the market as prices nosedived.
Terra Luna Classic (LUNC) and Terra (LUNA) traded 5% and 6% up respectively after the news.
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