Terraform Labs, Do Kwon enter preliminary agreement with SEC in TerraUSD case

The U.S. Securities and Exchange Commission (SEC) and Terraform Labs have reached a preliminary agreement with Do-Do Kwon on charges that he misled investors about TerraUSD.

Singapore-based Terraform Labs and its founder Do Kwon have reached a tentative settlement with the U.S. Securities and Exchange Commission (SEC) over accusations that they misled cryptocurrency investors ahead of the collapse of the TerraUSD stablecoin in 2022.

A jury found Kwon and Terraform Labs liable on civil fraud charges, according to Reuters, citing court documents, but the terms of the deal are not yet clear.

The SEC accused Terraform Labs and Kwon of deceiving investors in 2021 about the stability of TerraUSD, a stablecoin designed to maintain the value of $1. Regulators also alleged that Kwon and the company falsely claimed that Terraform’s blockchain was used in a popular mobile payments app in South Korea.

The cryptocurrency community appears divided on what the agreement means. While some expect this to have a positive impact on the price of Terra Classic (LUNC), others question how the company plans to return its money.

Previously, the SEC demanded that Kwon and Terraform Labs forfeit $5.3 billion for allegedly profiting from stablecoin sales. They also requested a ban on trading in ‘crypto asset securities’ and a fine of $420 million for the company and $100 million for Mr. Kwon.

Following the news, LUNC surged more than 9% to $0.00012, while its new token, LUNA, rose more than 13%, according to CoinMarketCap.

The collapse of TerraUSD and Terra Classic caused chaos in the cryptocurrency market in May 2022, with the SEC estimating that investors lost more than $40 billion. Kwon and his company argued that the maximum fine for Terraform Labs should be less than $3.5 million and $1 million for TerraUSD Mastermind.

Mr. Kwon, who is facing criminal charges in the U.S. and South Korea, denies any wrongdoing. Arrested in March 2023, he is still awaiting extradition from Montenegro.