Terraform Labs and its ex-CEO Do Kwon will have to pay $4.5 billion for civil fraud, the SEC announced this week.
Their 2022 crypto catastrophe with UST and LUNA wiped out $40 billion from the markets, all while Kwon mocked critics online before the disaster.
“I don’t debate the poor on Twitter,” Kwon infamously quipped before the collapse.
A Manhattan jury nailed Terraform Labs for duping investors on Terra’s stability, igniting a chain reaction that toppled FTX
Do Kwon’s Settlement Agreement Won’t Pay Users Jack
Under the terms of the agreement:
- $4.5 billion will be paid back in ill-gotten gains plus interest to the SEC.
- A $420 million civil penalty will be imposed.
- Do Kwon and Terraform Labs are prohibited from engaging in crypto asset securities transactions moving forward.
Now, will any of that money be returned to users? No.
Do Kwon has $4.5 bil to pay the SEC to settle.
Didn’t know the SEC takes money from scammers and their victims. All those Luna UST users got rugged twice. pic.twitter.com/AOSAVD9s7a
— Duo Nine ⚡ YCC (@DU09BTC) June 13, 2024
Terra Luna’s crash set off the 2022 crypto market collapse, shaking investor confidence to its core, something still felt today.
Kwon, now fighting extradition, will personally fork over $204 million. The funds await approval from Judge Rakoff before heading to Terraform Labs’ bankruptcy estate.
Do Kwon’s Legal Troubles Far from Over
Kwon’s $4.5 billion settlement barely scratches the surface of his legal woes. The U.S. DOJ has nailed him for fraud over Terra’s collapse, while South Korea has charged him with financial crimes, bribery, and market manipulation.
Several Korean officials invested in Terra Luna, so his trial there might not look so pretty.
Arrested in Montenegro with a fake passport, Kwon’s extradition fate hangs in the balance as courts decide between sending him to the U.S. or South Korea.
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The Bottom Line: Future Implications For Terra Luna
Harmed investors who held Terra Luna can take solace that Kwon’s $204 million will ostensibly go to investors through the bankruptcy estate.
“If approved, the proposed judgment will send an unmistakable deterrent message to those engaging in brazen misconduct,” the SEC emphasized in a statement.
This massive settlement signals a landmark victory for the SEC in their crypto crusade.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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