Do Kwon & Terraform Labs settle SEC charges related to the $40 billion Terra-Luna collapse. Details were undisclosed, but agreement was reached “in principle.” The extradition battle is ongoing.
According to court records, an oral argument scheduled for May 29 between Do Kwon, Terraform Labs, and the SEC was canceled “because the parties have informed the Court that they have reached a settlement in principle.”
Terraform Labs and Do Kwon Settle With The SEC Regarding the Terra-Luna Collapse Case
Papers are due from both parties by June 12 to formalize the agreement.
Initially, the SEC levied a colossal fine of $5.3 billion indictment against Kwon and his cryptocurrency enterprise, Terraform Labs. Last month, Kwon filed an opposition to the substantial punishment, opting instead to propose a maximum penalty of $1 million.
Similarly, the federal regulator demanded that Kwon be barred from serving as a director and securities officer of any issuer of securities and that the disgraced former CEO surrender personal accounts.
According to Kwon’s attorneys, their client’s prospective self-incrimination would violate the Fifth Amendment.
Where Will Kwon Be Extradited After His Remainder in Prison, Montenegro?
A month before the announcement of the settlement, Kwon was held liable for the $40 billion loss on cryptocurrency markets in May 2022 due to the failure of his algorithmic stablecoins Terra and Luna.
SEC Chair Gary Gensler issued the following statement in February 2023: “We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a variety of crypto asset securities, most notably LUNA and Terra USD.” “Furthermore, we assert that they engaged in fraudulent activity by disseminating false and deceptive information to establish confidence before inflicting catastrophic losses on investors.”
Terra’s price increased by more than 16.5% in the wake of the announcement.
Meanwhile, Kwon is detained in Montenegro as the United States and his country of origin, South Korea, vie for his extradition.
In March 2023, the former CEO and founder was apprehended in the Balkan nation of Montenegro on suspicion of forging travel documents while attempting to elude a months-long European and Asian-wide investigation. The documents had been falsified.
The Appellate Court of Montenegro halted his prospective extradition earlier this month in response to an appeal by his attorneys. The decision is presently undergoing review by the country’s High Court.
The resolution, if accepted, would conclude an eventful legal dispute that had developed between the federal regulator and Kwon and his organization. The details of the agreement have not been made public at this time.