Terraform Labs has agreed to a $4.47 billion settlement with the U.S. Securities and Exchange Commission (SEC) over its algorithmic stablecoin, which collapsed in 2022.
The SEC filed a proposed final consent judgment on Wednesday, requesting approval from Judge Jed Rakoff of the U.S. District Court for the Southern District of New York.
The settlement includes Terraform paying $3.58 billion in disgorgement and $420 million in a civil penalty, along with barring co-founder Do Kwon from serving as an officer or director of any public company.
Kwon is also required to contribute $204 million to a “Terraform bankruptcy estate” for investor compensation.
In February 2023, the SEC charged Terraform and Kwon with defrauding and misleading investors following the collapse of their stablecoin, Terra USD (UST). Despite Terraform and Kwon’s lawyers arguing for lower fines, the SEC initially sought $5.3 billion.
In April, a jury found Terraform and Kwon liable for civil fraud, determining they had misled investors and violated federal securities laws by engaging in fraudulent activities related to Terraform securities.
Judge Rakoff had previously granted summary judgment to the SEC on claims that Terraform and Kwon sold unregistered securities.
Image Credit: Pixabay
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