Terraform Labs, Do Kwon reach preliminary deal with SEC in TerraUSD case

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As a seasoned crypto investor with a keen interest in stablecoins and Terraform Labs, I find the preliminary settlement between the U.S. Securities and Exchange Commission (SEC) and Terraform Labs, including its founder Do Kwon, an intriguing development. The allegations of misleading investors about TerraUSD’s stability and false claims regarding the use of the firm’s blockchain in a popular Korean mobile payment app have been circulating for quite some time, and the outcome of this case has been closely watched by the crypto community.

The Securities and Exchange Commission (SEC) of the United States and Terraform Labs, together with Do Kwon, have agreed on a proposed resolution to the allegations that they deceived investors regarding TerraUSD.

As a Singapore-based crypto investor following Terraform Labs and its founder Do Kwon closely, I’m excited to share that we’ve made significant progress in our ongoing discussions with the U.S. Securities and Exchange Commission (SEC). We’ve reached a preliminary understanding on how to address their concerns regarding the communications leading up to the 2022 collapse of TerraUSD stablecoin. This is an important step towards resolving the allegations, and I remain optimistic about the outcome for our community.

Based on the report from Reuters, the specifics of the agreement remain undisclosed to me as an investor. However, it’s important to note that a jury previously determined that Kwon and Terraform Labs were responsible for civil fraud.

In 2021, the SEC, or Securities and Exchange Commission, accused Terraform Labs and its founder Kwon of misleading investors about TerraUSD’s stability. TerraUSD is a stablecoin that was intended to keep its value at $1. The regulatory body also claimed that Kwon and the company made false statements regarding the usage of Terraform’s blockchain in a widely used Korean mobile payment application.

Among crypto enthusiasts, there is a notable disagreement regarding the potential consequences of this settlement. While some believe that Terra Classic’s (LUNC) price will benefit from it, others express concerns about how the company intends to refund the affected parties.

Lmao now LUNA2 will moon. Unbelievable coincidence 😀 😀 😀

— Datawallet (@Datawalletcom) May 30, 2024

In the past, the Securities and Exchange Commission (SEC) ordered Kwon and Terraform Labs to surrender approximately $5.3 billion, which it claimed were unlawful profits from selling stablecoins. The regulatory body also proposed penalties of $420 million for the company and $100 million for Kwon. Moreover, they sought prohibitions preventing both parties from trading in “crypto asset securities.”

According to CoinMarketCap’s latest report, there was a significant increase in the value of LUNC by approximately 9% to reach $0.00012. Likewise, the newly introduced token, LUNA, experienced a notable growth of more than 13%.

In May 2022, the failure of TerraUSD and Terra Classic caused significant turbulence in the cryptocurrency sector. The Securities and Exchange Commission (SEC) reportedly calculated that investors suffered approximately $40 billion in losses as a result. However, Kwon and his firm proposed fines of only $3.5 million for Terraform Labs and under $1 million for the individual behind TerraUSD.

Kwon, currently under criminal accusations in both the United States and South Korea, maintains his innocence despite these allegations. Having been taken into custody in Montenegro in March 2023, he remains in the process of being handed over to the respective countries for further legal proceedings.

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2024-05-31 11:02