The company behind the Terra blockchain protocol cost investors over $40 billion
Terraform Labs, the company behind the Terra blockchain protocol, has settled its lawsuit brought forth by the US Securities and Exchange Commission (SEC) and must pay a total of about $4.47 billion. This includes $3.6 billion in disgorgement fines, a $420 million civil penalty and nearly $467 million in prejudgment interest.
Terraform Labs CEO and co-founder Do Kwon was found guilty by a jury and held liable for the Terra ecosystem collapse that lost investors $40 billion in assets. According to the settlement, Kwon must also pay $110 million in disgorgement penalties, about $14.3 million in prejudgment interest, and $80 million in civil penalties.
All crypto assets belonging to the Luna Foundation Guard and all Pyth Network (PYTH) token assets held by Kwon must be transferred to cover disgorgement fines and prejudgment interest costs. Earnings from the sale of the assets will go towards paying civil penalties.
The SEC filed a lawsuit against Terraform Labs in 2023, accusing the firm and its founder, Do Kwon, of selling unregistered securities and defrauding investors after the collapse of the Terra ecosystem.
The TerraUSD stablecoin first showed signs of uncertainty in 2022, just before investors began to move away from the Terra ecosystem. This later sparked fears within the Terra ecosystem, with TerraUSD losing its dollar peg and collapsing, resulting in investors losing billions of dollars.
Kwon’s destiny is still unknown as the high court in Montenegro decides his fate. The court is still examining whether he should be extradited to his native country or sent to the US to face multiple charges.
Kwon’s attorneys contend that inappropriate procedures and lower court filings have negatively affected the proceedings in the various appeals they have filed.
Emma Rodriguez is the Proofreader at the Big Blind, with seven years of experience and five years in online gambling. She plays a crucial role in maintaining content quality by ensuring error-free, reader-friendly information about the gambling industry.
