Crypto company Terraform Labs and its co-founder Do Kwon have agreed to pay 4.47 billion dollars to settle a civil lawsuit filed by the U.S. Securities and Exchange Commission, Bloomberg reports.
The lawsuit came after the company's collapse in 2022, which caused the loss of $40 billion in investor assets and had a significant impact on the world of cryptocurrencies. Following the news, Terraform's LUNA token rose more than 10%, hovering around $0.58, according to CoinMarketCap.
Kwon, once considered the king of cryptocurrencies, was arrested in March 2023 for falsifying travel documents while trying to leave Montenegro, a country in southern Europe. He is now awaiting extradition to the United States or South Korea, where he will face possible charges.
The SEC filed a case against Terraform and Kwon for the deceptive promotion and sale of crypto tokens, particularly the algorithmic stablecoin TerraUSD (UST).
The TerraUSD (UST) stablecoin was pegged to the Terra (LUNA) cryptocurrency, which meant that 1 UST dollar was always worth 1 Luna dollar. However, in May 2022, the value of LUNA plummeted from over $120 per coin to near zero, causing a loss of over $50 billion in UST/LUNA market capitalization and triggering a crash. that erased 400 billion dollars in value of the broader crypto market.
The situation got worse when FTX also collapsed that same year.
The financial watchdog accused Terraform and its co-founder Kwon of offering crypto assets that were not properly registered and misleading investors about their investment potential and stability. The SEC demanded that Kwon disclose all of his financial accounts and assets.
In addition to Kwon, US authorities have cracked down on several people involved in crypto fraud this year, including FTX's Sam Bankman-Friedfounder of Binance Chang Peng Zhaoand โBitcoin Jesusโ Roger Ver.
