Terraform Labs pays $4.47 billion to SEC

Following the fraud conviction, Terraform Labs and Do Kwon must pay a billion dollars to injured parties.

The fraud process against Terraform Labs, the development studio behind the collapsed cryptocurrencies UST and LUNA, and founder Do Kwon ends with a billion-dollar fine. This is the result of a judgment which was handed down yesterday, Wednesday, by the Manhattan court of competent jurisdiction.

The total fine is $4.47 billion. Terraforms Labs will pay most of the fine. However, Do Kwon is also expected to contribute a total of more than $204 million. Among other things, the money is to flow into the bankruptcy estate.

Originally, the SEC had imposed a penalty of $5.3 billion claimed.

In addition, both parties are no longer allowed to participate in cryptocurrency trading. In particular, this includes all tokens from the Terra ecosystem.

In April, the jury found Terraform Labs and Do Kwon guilty of misleading investors and, in particular, lying about the value stability of their own stablecoin UST.

In May 2022, Terra's ecosystem collapsed after UST lost its peg to the U.S. dollar. The decoupling also caused its own token LUNA to plummet in value, harming thousands of investors and causing a wave of bankruptcies in the crypto industry. Estimates put the losses at more than $40 billion.

Meanwhile, the tug-of-war over founder Do Kwon continues. In March 2023, the South Korean arrested in Montenegro after a months-long chase and would be extradited to the U.S. The Supreme Court overturned the decision at the last minute. Kwon has since been released.

Criminal proceedings are pending against the 32-year-old in both the U.S. and South Korea. In the worst case, he could face 40 years in prison.