Terraform Labs will pay $4.47 billion in fines to settle the case with the SEC
Date: 2024-06-13 Author: Gabriel Deangelo Categories: BUSINESS
Failed company Terraform Labs has agreed to pay a $4.47 billion fine to settle its case with the US Securities and Exchange Commission (SEC). This decision includes various types of compensation and penalties aimed at repaying debts and satisfying the claims of affected investors.
Composition of the Penalty
According to the proposed settlement plan, the total amount of the fine includes:
- Compensation costs: $3.6 billion
- Civil fine: $420 million
- Early judgment interest: $467 million
The former CEO of Terraform Labs, Do Kwon, is also ordered to pay a significant amount, including:
- Penalty for debt repayment: $110 million
- Civil fines: $80 million
- Interest: $14.3 million
The total amount of payments from Do Kwon will be $204.3 million, which will be considered satisfied provided that all of Kwon's transfers to the SEC and the Terraform Labs bankruptcy estate reach that amount.
The document also states that Do Kwon must transfer $4.7 million to an escrow account agreed upon with the SEC within 30 days of the final decision. In addition, the settlement plan involves the transfer of all Luna Foundation Guard crypto assets and Pyth Network tokens (PYTH) to cover the specified fines.
SEC Statement
"This resolution will provide maximum recovery to affected investors and put Terraform out of business permanently. Therefore, the proposed resolution is fair, reasonable and in the public interest," the SEC said in a statement.
In April 2024, the court found Do Kwon and Terraform Labs guilty of fraud and the collapse of the Terra ecosystem to the tune of $40 billion. The SEC initially sought a fine of $5.2 billion, but the defendants appealed this amount, arguing that the civil penalty should not exceed $1 million .
The Uncertainty of Do Kwon's Fate
Do Kwon's fate remains uncertain. A court in Montenegro changed its decision to extradite the former head of Terraform Labs several times, leaving the final decision to the Ministry of Justice. The defense filed an appeal in April 2024, seeking Do Kwon's transfer to South Korean authorities rather than the United States.
The $4.47 billion settlement demonstrates the serious implications for Terraform Labs and its former executive Do Kwon. This decision is an important step towards compensating injured investors and restoring confidence in the cryptocurrency industry.
