Terraform Labs and Do Kwon Reach Preliminary Settlement with SEC in TerraUSD Case

The U.S. Securities and Exchange Commission and Terraform Labs, along with Do Kwon, have reached a preliminary settlement regarding allegations that TerraUSD deceived investors.

Singapore-based Terraform Labs and its founder Do Kwon have reached a tentative settlement with the U.S. Securities and Exchange Commission (SEC) over allegations they misled cryptocurrency investors ahead of the TerraUSD stablecoin collapse in 2022 .

As per Reutersciting court documents, the terms of the settlement are not yet clear, although a jury previously found Kwon and Terraform Labs liable on civil fraud charges.

The SEC accused Terraform Labs and Kwon of misleading investors in 2021 about the stability of TerraUSD, a stablecoin designed to maintain its value at $1. The regulator also said that Kwon and the company falsely claimed that Terraform’s blockchain was being used in a popular Korean mobile payment app.

The crypto community appears to be divided on the implications of the deal. Some predict a positive impact on the price of Terra Classic (LUNC), while others request how the company intends to return the money.

Previously, the SEC had requested that Kwon and Terraform Labs LOSE $5.3 billion in alleged ill-gotten gains from the sale of stablecoins. He also sought fines of $420 million for the company and $100 million for Kwon, as well as a ban on trading “cryptographic asset securities.”

Following the news, LUNC rose more than 9% to $0.00012, while the new token, LUNA, gained more than 13%, according to CoinMarketCap.

The collapse of TerraUSD and Terra Classic interrupted cryptocurrency markets in May 2022, with the SEC estimating that investors lost over $40 billion. Kwon and his company argued that the maximum fines should be $3.5 million for Terraform Labs and less than $1 million for the TerraUSD mastermind.

Kwon, who faces criminal charges in the United States and South Korea, denies any wrongdoing. Arrested in March 2023, he is still awaiting extradition from Montenegro.

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