In a fraud case, Terraform Labs agrees to pay the SEC $4.5 billion.
The US Securities and Exchange Commission (SEC) and Terraform Labs, the cryptocurrency company accountable for the collapse of TerraLuna and TerraUSD, have agreed a $4.47 billion settlement. Its algorithmic stablecoin, which experienced a severe crash in 2022, is the subject of the fine.
See also: Terraform Labs sues SEC for unfair $5.3 billion fine
As per the terms of the settlement, trading in cryptocurrency assets, including any tokens inside the Terra ecosystems, would be forbidden for Terraform Labs and its previous CEO, Do Kwon. Kwon was also prohibited by SEC from holding an officer or director position in a public business.
Sec uses Terraform Labs as an example.
About $3.75 billion in disgorgement, more than $460 million in prejudgment interest, and $420 million in civil penalties are all included in the $4.47 billion.
The proposed arrangement states that Kwon will give $200 million to the bankruptcy estate of Terraform in order to distribute the money to the impacted investors. The business declared bankruptcy earlier in the year.
The SEC stated in their filing on Wednesday:
“The proposed consent judgement imposes significant remedial, punitive, and compensatory measures to address the magnitude of this fraud.” Deterrent measures, such as a judgement against defendants worth billions of dollars.”
The Singapore-based companies Terraform and Kwon, according to the SEC, raised billions of dollars through the trading of interconnected digital securities, many of which were improperly registered with regulators, between April 2018 and May 2022. One of the digital assets was Kwon’s own creation, TerraUSD.
Update from Terraform Labs: @SECGov’s $4.5 billion fine is confirmed.
“A jury found Kwon and Terraform liable for intentionally and recklessly orchestrating one of the largest securities frauds in US history” https://twitter.com/aGYMAtVxPY #Terraform #SEC
In June, MartyParty (@martypartymusic) 12, 2024
Heavy punishment to aid victims in quickly recovering
Earlier this year, Terraform and Kwon were found accountable for “intentionally and recklessly orchestrating one of the largest securities frauds in US history.”
According to the SEC, the fines are within the legal limitations and “will send a clear deterrent message to those who might be contemplating similar fraudulent schemes.”
The fines will also assist in giving investors who lost money in the $40 billion collapse of the TerraUSD digital tokens in 2022 a substantial and quick recovery see also: OKX reimburses users whose property was pilfered via its portal
Additionally, SEC attorneys sent a letter to the court pleading with Southern District of New York (SDNY) Judge Jed Rakoff, the New York judge presiding over the case, to approve the settlement agreement.
“If approved the proposed judgement will send an unmistaken deterrent message to not only those who engage in brazen misconduct, but also to all those who seek to evade the requirements of the federal securities laws,” the Securities and Exchange Commission stated.
The cryptocurrency community was astonished by the 2022 collapse of TerraUSD and the corresponding coin Luna.
Conclusion
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