Terraform Labs Pte. has agreed to pay $4.47 billion to settle a lawsuit filed by the US Securities and Exchange Commission. 

The firm's collapse in 2022 resulted in the loss of $40 billion in investor assets and significantly impacted the cryptocurrency industry.

SEC Settlement: Terraform to Pay $3.59 Billion

The SEC requested approval for the settlement from a federal judge in New York on Wednesday (June 12). The agreement was reached following a jury's determination of Terraform and co-founder Do Kwon's liability for fraud during a two-week civil trial in April. 

Kwon is still dealing with a criminal case regarding selling the firm's UST stablecoin.

Terraform has agreed to pay approximately $3.59 billion, interest, and a $420 million penalty. On the other hand, Kwon will be paying $204.3 million, including $110 million in disgorgement, interest, and a $80 million penalty, as revealed in a court filing, Bloomberg reported. 

As part of the settlement, Kwon must transfer a minimum of $204.3 million to the Terraform bankruptcy estate for distribution to investors. 

Additionally, Kwon will be prohibited from holding any officer or director positions in a public company.

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SEC Accuses Terraform, Kwon of Investor Deception

The SEC has accused Terraform and Kwon of misleading investors regarding the stability of TerraUSD, a currency designed to maintain a constant $1 price. 

Additionally, they have been accused of falsely stating that Terraform's blockchain was utilized in a well-known Korean mobile payment application.

In May 2022, TerraUSD and its closely linked token, Luna, experienced a collapse as TerraUSD struggled to maintain its peg to the dollar.

According to Reuters, Kwon could not attend the trial because he had been detained in Montenegro since March 2023. 

The United States and South Korea are seeking his extradition to address the criminal charges against him. He has strongly denied any wrongdoing.

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