Singapore-based Terraform Labs and its founder, Do Kwon, have reached a “tentative settlement” with the US Securities and Exchange Commission (SEC) in a high-profile civil fraud case, as reported by Reuters. 

The SEC’s lawsuit, initially filed in February 2023, accused Terraform Labs and Do Kwon of orchestrating a large-scale crypto scam involving the sale of various digital assets, notably LUNA and the algorithmic stablecoin Terra USD (UST). 

The regulator alleged that the defendants misled investors about the stability of TerraUSD and falsely claimed that Terraform’s blockchain was integrated into a popular Korean mobile payment app.

The recent jury verdict determined the defendants’ responsibility for fraud, providing the SEC with a significant boost in its ongoing efforts to crack down on fraudulent activities within the digital asset industry. 

Following the verdict, the SEC filed a motion seeking billions of dollars in disgorgement and civil penalties against Terraform Labs and Do Kwon.

According to the SEC’s motion filed on April 5, 2024, the jury ruled in favor of the SEC on all counts. The SEC now seeks relief in the form of an injunction against Terraform Labs and Do Kwon to prevent future violations of securities laws, joint and several disgorgements totaling approximately $4 billion, $545 million in prejudgment interest, a civil penalty of $420 million for Terraform Labs, and $100 million for Do Kwon.

The SEC’s motion also requests a conduct-based injunction, which would prohibit Terraform Labs from participating in crypto asset transactions and engaging in activities that could induce such transactions. 

Additionally, the SEC seeks an officer and director bar against Do Kwon and a declaration that the fraud-related monetary sanctions imposed on Terraform Labs are nondischargeable in bankruptcy.

Both Terraform Labs and Do Kwon have submitted their own proposed civil penalties, with Terraform Labs seeking a maximum penalty of $3.5 million and Do Kwon requesting a penalty of $800,000. 

The settlement agreement is currently awaiting approval by US District Judge Jed Rakoff in Manhattan, who has requested supporting documents from both the SEC and the defendants by June 12.

As the legal proceedings progress, the outcome of this case will likely have significant implications for future regulatory actions and investor protection measures within the cryptocurrency space.

At the time of publication, the native token of the protocol, Terra Luna Classic (LUNC), is trading at $0.0001224, experiencing a significant rebound of nearly 5% within the past 24 hours. 

This surge in price is consistent with the token’s upward trend observed over the past month, reflecting a growth of 24% during that period. Additionally, the token has witnessed an 115% increase in trading volume compared to Wednesday’s trading session.

Featured image from Shutterstock, chart from TradingView.com 

Similar to Notcoin - Blum - Airdrops In 2024

origin »

130 +