WASHINGTON, DC, Tuesday, June 25, 2024 – The Securities and Exchange Commission (SEC) announced today a landmark $4.5 billion settlement with Terraform Labs and its co-founder, Do Kwon.
The SEC announced this via a Press Release on June 17.1
This follows a jury verdict finding them liable for orchestrating a massive fraud involving crypto asset securities that resulted in billions of dollars in investor losses.
A nine-day jury trial in April exposed Terraform and Kwon’s deceptive practices. The SEC alleged they misled investors about the use of the Terraform blockchain for transactions and the stability of their TerraUSD (UST) stablecoin.
In May 2022, UST lost its peg to the U.S. dollar, causing its value and that of other Terraform tokens to plummet. This “crypto crash” erased an estimated $40 billion in market value and devastated countless investors.
“This case affirms the importance of adhering to securities laws regardless of the label attached to a financial product,” said SEC Chair Gary Gensler. “Terraform and Do Kwon’s fraudulent activities illustrate how non-compliance can inflict significant harm on investors.”
The settlement comprises disgorgement, prejudgment interest, and civil penalties. Terraform will pay over $4 billion and cease selling crypto asset securities, while Kwon is responsible for roughly $200 million. Additionally, both parties are permanently barred from violating the registration and anti-fraud provisions they were found to have broken.
The SEC Press Release can be seen here
