Terraform Labs and Do Kwon Reach Settlement with SEC Following Fraud Accusations

After intense negotiations and a context of legal disputes, Terraform Labs and its founder, Do Kwon, signed an agreement with the United States Securities and Exchange Commission (SEC). The company, which is based in Singapore, and Kwon were the center of a significant controversy that culminated in civil fraud charges related to the collapse of the TerraUSD stablecoin in 2022.

The information was released through court documents, where it is revealed that the SEC accused Terraform Labs of misleading investors before the dramatic decline of its stablecoin. This episode not only marked the company, but also highlighted the risks associated with cryptocurrencies in the global financial market.

Do Kwon, who has faced a series of legal challenges, is detained in Montenegro. His judicial situation was further complicated by decisions on his extradition, which were transferred from the court to the hands of the country’s Minister of Justice. Previously, Kwon was captured while traveling with forged documents, which added another layer of complexity to his case.

The civil fraud verdict, handed down by a US jury in February 2023, specifically concerns Terraform Labs and Kwon’s actions with Terra USD (UST), an algorithmic stablecoin that suffered an abrupt and impactful crash approximately one year.

This agreement with the SEC could represent a pivotal moment for both Terraform Labs and Do Kwon, signaling a possible stabilization in the ongoing legal and market turmoil surrounding them. The agreement, specific details of which are still scarce, should guide the company’s future operations and possible compensation to affected investors.

At the time of publication, the price of LUNA was quoted at US$0.6987, up 14% in the last 24 hours.

Disclaimer:

The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.