Terraform Labs to Pay $4.47 Billion to Settle SEC Charges

Terraform Labs to Pay $4.47 Billion to Settle SEC Charges

Terraform Labs has reached an agreement with the U.S. Securities and Exchange Commission to settle civil charges related to the collapse of its Terra ecosystem and its UST and LUNA tokens in 2022.

The company has committed to pay approximately $4.47 billion, including nearly $3.6 billion in disgorgement penalties, a $420 million civil penalty, and nearly $467 million in prejudgment interest.

Do Kwon’s Financial Responsibilities

DoKwon, co-founder of Terraform Labs, is personally obligated to pay $110 million in disgorgement penalties and approximately $14.3 million in prejudgment interest. This decision follows a jury verdict that found Terraform Labs and its co-founder liable for the collapse of the Terra ecosystem, resulting in the loss of $40 billion in investor assets.

Settlement Details and Transfer of Crypto Assets

Under the terms of the settlement, the monetary payments against Do Kwon will be deemed satisfied, provided that all transfers made by Kwon to the SEC and the Terraform bankruptcy estate in the bankruptcy proceedings reach at least $204,320,196.

This amount excludes the value of all Terraform crypto assets transferred to the bankruptcy estate, with an additional condition requiring Do Kwon to transfer $4.7 million to an agreed-upon escrow account with Commission staff within 30 days of the final judgment.

The settlement also stipulates the transfer of all crypto assets belonging to the Luna Foundation Guard and all PYTH token holdings of Do Kwon to cover the cost of disgorgement penalties and prejudgment interest.

Any remaining funds from the sale of these assets will be applied to the civil penalty fines.