Do Kwon and the company he co-founded, Terraform Labs, have agreed to a “settlement in principle” with the SEC in a civil case alleging fraud.
Terra’s LUNA token surged as much as 38% after news of the agreement became public.
Terraform Labs and co-founder Do Kwon have reached a “settlement in principle” with the U.S. Securities and Exchange Commission (SEC) over a civil case alleging fraud, according to a court filing Thursday.
Terraform’s LUNA token climbed as much as 38% to the highest since April 12 after news of the agreement became public, according to data on charting platform TradingView.
A listing for the District Court for the Southern District of New York refers to a May 29 telephone conference, “without transcription or recording.” Counsels for all the parties were present. The scheduled oral arguments were “cancelled because the parties have informed the Court that they reached a settlement in principle.” The parties must file documentation in support of the settlement in front of Judge Jed S. Rakoff by June 12.
The development comes less than two months after a Manhattan jury delivered a ‘liable’ verdict after a nine-day trial. The SEC had accused Terraform Labs and Kwon of misleading investors about the stability of its products. The $40 billion ecosystem based around the algorithmic stablecoin UST and an earlier version of LUNA collapsed in May 2022, triggering an industry-wide contagion.
Later that month, the SEC said it was looking to impose a $5.3 billion penalty to settle the case, its steepest fine yet on a cryptocurrency project. Terraform replied in court that only an “appropriate civil penalty” per violation should be imposed. During the trial, CEO Chris Amani had said the company was undergoing bankruptcy proceedings and had only approximately $150 million in assets remaining. Lawyers of Do Kwon said Kwon has “no illegal profits … to disgorge.”
Do Kwon is currently on bail in Montenegro, awaiting extradition to either the U.S. or South Korea. He also faces criminal charges in New York, as well as in South Korea.
UPDATE (May 30, 17:11 UTC ): Adds LUNA reaction in second paragraph, background on trial starting in fourth.
