On June 13, 2024, Terraform Labs PTE, Ltd. and Do Kwon agreed to pay more than $4.5 billion to settle the SEC’s case against them. The settlement followed a jury verdict holding Terraform Labs and Kwon liable for securities fraud. The jury was out for less than two hours after the court gave the case to them for deliberations.
That’s a lot of money. Specifically, Terraform Labs and Kwon agreed to pay $3,586,875,883 in disgorgement and $466,952,423 prejudgment interest. According to a letter the SEC submitted to the court in support of the proposed judgment, the disgorgement amount represents a reasonable approximation of the defendants’ profits from their unregistered offers and sales of LUNA, MIR, and UST. Terraform Labs must also pay a $420,000,000 penalty; not purchase, offer, or sell crypto asset securities, including LUNA, MIR, and UST; and distribute its remaining assets to investors and creditors via a liquidation plan subject to approval by the court in Terraform’s related bankruptcy case. Kwon also agreed to pay an $80,000,000 penalty.
We here at SKrypto have given the SEC some grief in the past for bringing standalone crypto asset registration cases. “Let them bring fraud cases. That is where the market needs them,” we said. Well, they just dragged a huge fraud case across the finish line.