Do Kwon and Terraform Labs reached a settlement agreement with the SEC
Terraform Labs founder Do Kwon is said to have reached a settlement agreement in a lawsuit alleging fraud brought by the US Securities Commission (SEC).
According to a court filing on May 30 (US time), Terraform Labs and founder Do Kwon have reached a settlement agreement with the US Securities Commission (SEC), the unit that is making the allegations. scam related to the collapse of LUNA - UST in 2022.
Specifically, both the plaintiff and defendant had a phone meeting on May 29, with the content kept confidential. After the meeting, the plaintiff, the SEC, informed the judge that there was no need to continue taking each other to court because the two had reached an agreement to settle the lawsuit. Evidence of reconciliation will be submitted to the court no later than June 12.
Previously, in early April, the jury participating in the trial of the SEC's lawsuit against Do Kwon and Terraform Labs agreed with the argument that the defendant had made false statements about the LUNA model. - UST to defraud investors. The judge presiding over the trial also agreed with the SEC's opinion that LUNA - UST was a disguised security.
Next, the SEC proposed that the court fine Terraform Labs $5.3 billion for the violations it committed.
Do Kwon is still in Montenegro, the country that arrested the former CEO of Terraform Labs in March 2023 for using a fake passport. Since then, the Balkan national government has been continuously confused because it does not know whether to extradite Do Kwon to the United States or South Korea, countries that all have indictments against Do Kwon and want to conduct a trial for this person.
The LUNA token price on the evening of May 30 increased by nearly 40% after news that Do Kwon and Terraform Labs reached a settlement agreement with the SEC.
Previously, Terraform Labs' lawyers and co-founder Do Kwon said a fine of nearly 1 million USD was reasonable after being convicted of fraud, not 5.2 billion USD as set by the Securities and Exchange Commission. United States (SEC) proposed.
The statement comes a week after the SEC said Kwon and Terraform must pay a whopping $5.2 billion in fines, including the $4.7 billion *disgorgement plus Terraform's $520 million penalty ($420 million USD) and Kwon (100 million USD).
*Disgorgement: is a remedy that requires a party who profits from illegal or wrongful conduct to give up any profits they made from that illegal or wrongful conduct.
Attorneys for Kwon and Terraform said in court filings that the fine could be much lower:
“In sum, the Court should not issue any injunctive relief or disgorgement and should impose the maximum civil penalty of $1 million against TFL.”
It all started more than a year ago when the SEC accused Terraform and Kwon of running a multibillion-dollar fraud scheme in February 2023. During the trial, SEC attorneys likened Terra to a “house of cards” – a setup that was bound to collapse and in fact, it collapsed in 2022, causing a domino effect that hit the entire cryptocurrency market hard.
Earlier this month, a jury ruled that both Terraform and Kwon deceived investors and were liable for civil fraud. The main issues the jury had to delve into revolved around the SEC's claim that Kwon and Terraform violated federal securities laws by engaging in fraudulent practices in connection with the purchase and sale of Terraform securities. Judge Jed Rakoff previously granted summary judgment in favor of the SEC finding that Terraform and Kwon offered unregistered securities.
