Skip to content
Sign In Subscribe
Crypto — News

Court Approves $4.5 Billion SEC Settlement with Terraform Labs

Under the terms, Terraform will pay nearly $3.6 billion in disgorgement, a $420 million civil penalty, and around $467 million in prejudgment interest.

,   and  Harshajit Sarmah
1 min read
Do Kwon. Source: a video screenshot, Coinage / YouTube
  • Terraform Labs and its former CEO, Do Kwon, have agreed to a $4.5 billion settlement with the U.S. SEC.
  • The deal, signed by New York District Court Judge Jed Rakoff, permanently bans them from crypto asset securities.
  • Ripple Labs argues the SEC's $4.5 billion penalty against Terraform Labs is excessive, noting that similar cases have seen lower settlements.

Terraform Labs and its former CEO, Do Kwon, have reached a settlement agreement with the U.S. Securities and Exchange Commission (SEC) involving $4.5 billion in disgorgement and civil penalties. 

The settlement, filed on Wednesday, permanently bans Kwon and Terraform Labs from buying and selling crypto asset securities, including all tokens in the Terra ecosystem. 

New York District Court Judge Jed Rakoff signed off the deal on June 13. Under the terms, Terraform will pay nearly $3.6 billion in disgorgement, a $420 million civil penalty, and around $467 million in prejudgment interest. 

Additionally, Kwon and Terraform agreed to pay $110 million in disgorgement, $14.3 million in prejudgment interest, and an $80 million civil penalty. 

However, for many, it remains unclear where the $4.5 billion for the settlement will come from. In January, when the company filed for bankruptcy, it reported assets and liabilities ranging between $100 million and $500 million.

Meanwhile, blockchain payment platform Ripple Labs Inc. is supporting Terraform Labs, urging the court to reject the SEC settlement penalty. Ripple described the SEC's settlement request as unreasonable. 

Ripple filed a notice of supplemental authority, noting that the SEC has requested lower settlements in more severe cases, with civil penalties usually ranging from 0.6% to 1.8%. Ripple believes that Terraform Labs should fall within this category and that the SEC's penalty is excessive. Ripple also highlighted that there are no fraud allegations against Terraform Labs, nor did institutional investors suffer substantial losses.

Edited by Harshajit Sarmah

Related

Latest