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Highlights
- Terraform Labs has settled with the United States SEC
- The settlement is valued at $4.47 billion according to reports from Reuters
- This is the second high profile crypto settlement after Binance's $4.3 billion settlement with DOJ last year
Embattled blockchain startup Terraform Labs has agreed to settle charges levied against it by the United States Securities and Exchange Commission (SEC) for $4.47 billion.
Terraform Labs To Finally Gain Freedom
The news of the settlement was first shared by Reuters in what will come as the next high-profile case in the crypto ecosystem to pay over $4 billion in settlement. Terraform Labs settlement with SEC includes $3.58 billion in disgorgement and $420 million in a civil penalty.
This settlement plan was first hinted at a few weeks ago. The company categorically agreed in principle to settle with the United States SEC. Consequently, both parties informed the court led by Judge Jed Rakoff of the U.S. District Court for the Southern District of New York, of their decision with filings due for June 12.
The decision to settle came after a jury’s verdict in April, where Do Kwon and his company were found liable for deceiving investors about their cryptocurrency products. With the settlement details finally filed today, this could mark the end of the legal debacle which started two years ago.
Just like Terraform Labs, months ago, Binance Exchange settled with the Department of Justice (DOJ) for a long-standing probe into the exchange.
The trading platform agreed to pay $4.3 billion that went to the DoJ, the Financial Crimes Enforcement Network (FinCEN) and the Commodity Futures Trading Commission (CFTC). The settlement at the time also saw the resignation of founder Changpeng ‘CZ’ Zhao who is now currently in jail.
The Fall of Terraform Labs
Terraform Labs came under the radar of the authorities in 2022 when its co-founder Do Kwon was accused of fraudulent activities.
In the space of a few months, Terraform Labs saw the liquidation of its tokens Terra (LUNA) and TerraUSD (USTC) as both were called at the time. The liquidation saw over $40 billion wiped from the market, drawing attention from regulators like the SEC.
The collapse sapped out about $2 trillion from the broader crypto market capitalization that year. The ecosystem is still recovering from the shock waves that it received as a result of the unfortunate situation.
In the last two years, Do Kwon has aced severe legal issues including some indecisive extradition cases. For now, he has been blocked by the Appeals Court of Montenegro from getting extradited to South Korea.
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