The legal case between Terraform Labs, its founder, and the US Securities and Exchange Commission is gradually ending. A New York district court judge has endorsed a $4.5 billion settlement with the SEC for Terraform Labs and Do Kwon.
Terraform Labs and Do Kwon To Pay $4.5 Billion to Settle With SEC
New York District Court Judge Jed Rakoff approved the settlement between Terraform Labs, its founder, and the SEC.
According to the judge’s order, Terra and Kwon will pay billions in fines and penalties to the US regular. Moreover, the judge banned the defendant from engaging in the crypto industry in the future.
Judge Rakoff approved a $4.5 billion settlement deal. The court mentioned that Terraform will pay almost $3.6 billion in disgorgement and a civil penalty of $420 million. Also, the company will pay the regular prejudgement interest of $467 million.
In agreement with Terraform, Kwon will pay $110 million in disgorgement. He will also pay a civil penalty of $80 million and a prejudgement interest of $14.3 million.
After the court’s ruling, SEC Chair Gary Gensler issued a statement on June 13. He mentioned that Judge Rakoff’s verdict confirms what many courts have said regarding a product’s status.
Further, Gensler stated that the labels, spin, or hype on a product don’t determine whether it’s a security. Instead, it’s the economic realities of a product that does that under the securities laws.
Gensler also mentioned that Terraform and Do Known used fraudulent activities to create huge investor losses. Their scheme proves that investors suffer the most when firms fail to comply with the law.
In context, Terraform’s algorithmic stablecoin, TerraUSD, de-pegged from its USD value, triggering the implosion of the entire Terraform crypto ecosystem, resulting in the loss of over $45 billion in assets. As a result, the SEC sued the company and its founder, Do Kwon, for violating US securities law.
Crypto Community Reacts To Court’s Approved Settlement Deal For Terraform and Kwon
The recent court approval of a $4.5 billion settlement deal for Terraform and Kwon has sparked several reactions in the crypto community.
CryptoQuant’s CEO, Ki Young Ju, criticized the US judiciary system for its Terraform vs. SEC case decision. He noted that the $4.5 billion settlement deal for Terraform and Kwon is practically impossible.
He noted that it would only take Kwon to commit a financial crime to raise such a settlement amount. Further, CEO Ju slammed the US government’s method of tackling economic crime. He noted that the authorities focus only on monetary gains instead of upholding the law.
Ju also maintained that the country has a broken judiciary system. He explained that the US would seize criminal proceeds while acting as a global enforcer but would never compensate the international victims.
Similarly, an X user labelled the court’s judgment as “one of the craziest examples of agency corruption.”
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