Terraform Labs has reached an agreement with the United States Securities and Exchange Commission (SEC) to pay approximately $4.47 billion as part of a settlement with the securities regulator. The total amount includes disgorgement fines of around $3.6 billion, a civil penalty of $420 million, and prejudgment interest of nearly $467 million.
The settlement comes after a jury found Terraform Labs and its co-founder responsible for the collapse of the Terra ecosystem, resulting in the loss of $40 billion in investor assets.
As per the terms of the settlement, former Terraform Labs CEO Do Kwon is facing disgorgement penalties of $110 million, civil penalties of $80 million, and prejudgment interest fines of about $14.3 million. The settlement details outlined the immediate and short-term actions to be taken.
In addition, the filing specified the transfer of all crypto assets owned by the Luna Foundation Guard and all Pyth Network (PYTH) token holdings from Kwon to cover the disgorgement fines and prejudgment interest, with any remaining funds from the asset sales to be used for the civil penalty fines.
The lawsuit filed by the SEC against Terraform Labs in 2023 accused the firm and its founder, Do Kwon, of selling unregistered securities and defrauding investors following the collapse of the Terra ecosystem.
In 2022, the TerraUSD algorithmic stablecoin experienced instability, leading to investors fleeing the Terra ecosystem, resembling a bank run. Subsequently, TerraUSD lost its dollar peg and collapsed, resulting in significant losses for asset holders.
The situation regarding founder Do Kwon remains uncertain as Montenegro courts grapple with the decision of whether to extradite the South Korean native. The high court in Montenegro is currently deliberating on whether to send Kwon back to his home country or the United States to face charges.
Amidst these legal proceedings, the mystery of Polygon’s missing MATIC tokens has been a hot topic, with ChainArgos reporting that many are involved in similar activities.