WASHINGTON Tuesday, August 6, 2024 – The Securities and Exchange Commission (SEC) released updated information Tuesday to assist investors affected by the Terraform Labs collapse in filing compensation claims.
The guidance, posted on the SEC website, provides answers to frequently asked questions and contact information for the claims process, which will be handled through Terraform’s bankruptcy case.
The announcement comes after a surge in inquiries regarding compensation following the SEC’s June settlement with Terraform Labs. The settlement resolved civil fraud charges stemming from the 2022 collapse of the TerraUSD stablecoin. Terraform Labs agreed to pay nearly $4.5 billion.
SEC lawyers argued the settlement amount sends a “strong deterrent message” against similar misconduct and attempts to circumvent securities laws with crypto assets. The initial request for penalties against Terraform Labs was $5.3 billion, while the company proposed a $1 million fine.
As part of the agreement, Terraform Labs founder Do Kwon will contribute over $200,000.
In April, both Terraform Labs and Kwon were found liable for the TerraUSD collapse, which wiped out an estimated $40 billion in digital assets. Kwon fled South Korea following the collapse, sparking a months-long manhunt. He was eventually apprehended in Montenegro on document forgery charges.
Kwon has completed his sentence in Montenegro but remains incarcerated while awaiting a decision on extradition requests from the United States and South Korea for facing criminal charges related to the alleged crypto fraud scheme. Kwon reportedly prefers extradition to South Korea, where he might face less severe penalties.
The specific criminal charges Kwon will face remain unclear.
