'Tera' Kwon Do-hyung Reaches Settlement on Civil Lawsuit Fine with US SEC

No Specific Details on Fine Settlement Amount Disclosed
Earlier, SEC Claimed a Fine of 7 Trillion Won

Terraform Labs and co-founder Kwon Do-hyung have tentatively agreed on the amount of restitution and fines related to the collapse of the cryptocurrency Terra and Luna.

According to court records released on the 30th (local time) by the U.S. District Court for the Southern District of New York, the U.S. Securities and Exchange Commission (SEC) and representatives of both Terraform Labs and Kwon informed the court that they have reached a principle agreement regarding the imposition of fines. Both parties must submit settlement documents to the court by June 12. However, specific terms of the agreement, including the amount of fines, have not yet been disclosed.

[Image source=EPA Yonhap News]

Earlier, the U.S. securities regulator SEC filed a civil lawsuit in November 2021 against Kwon and Terraform Labs, alleging that they deceived investors about the stability of Terra, causing massive losses. The SEC estimated that investors in Terra and Luna suffered total losses exceeding $40 billion due to the breaking of Terra's dollar peg (fixing the value at 1 coin per 1 dollar, etc.).

Judge Jed Rakoff, who presided over the trial, recognized in December last year that Terra, a type of stablecoin (cryptocurrency whose value is linked to collateral assets such as the dollar), qualifies as a security. This ruling sided with the SEC, which argued that Terraform Labs violated securities laws by selling unregistered securities.

The jury also found Kwon and Terraform Labs responsible for deceiving investors. Following the jury verdict, the SEC demanded that Kwon and Terraform Labs pay a total of $5.26 billion (approximately 7.2 trillion won) in disgorgement of illegal profits and civil fines. Kwon and Terraform Labs had argued that most cryptocurrency issuance and sales occurred outside the United States, disputing the SEC’s basis for imposing disgorgement, but this settlement appears to represent a step back from that position.

Meanwhile, Kwon, who had been on the run, has been detained locally since his arrest in Montenegro last March on charges of passport forgery. Earlier, the New York Prosecutor’s Office filed charges against Kwon on eight counts, including securities fraud, wire fraud, commodity fraud, and conspiracy to manipulate the market, following his arrest in Montenegro last year. Kwon is also criminally charged in South Korea. The United States and South Korea are engaged in a tug-of-war over his extradition. Due to differing rulings by the Montenegrin judiciary regarding Kwon’s extradition, the final country to which Kwon will be extradited remains uncertain.

This content was produced with the assistance of AI translation services.