As a researcher with a background in finance and experience following the cryptocurrency market closely, I’m deeply concerned about the recent collapse of Terraform Labs and the subsequent $4.47 billion settlement with the SEC. The loss of $40 billion in investor assets is an alarming figure that has sent shockwaves throughout the industry.
In 2022, Terraform Labs, the company under scrutiny, reached an accord with the SEC to settle a civil lawsuit against them for a hefty sum of $4.47 billion.
As a crypto investor, I’ve experienced the aftermath of a significant legal action that led to the collapse of a project, resulting in a devastating loss of approximately $40 billion worth of assets. The reverberations from this event echoed loudly within the cryptocurrency industry.
Terraform Labs And Do Kwon Liable For Collapse
A federal judge in New York is being asked by the SEC to approve a settlement between the regulatory body and Terraform, following a jury verdict in a two-week trial that held both the company and its co-founder, Do Kwon, responsible for the collapse.
Based on the filing for the settlement, Kwon’s monetary obligations will be considered fulfilled if he transfers a total of at least $204,320,196 to both the SEC and the Terraform bankruptcy estate in the bankruptcy case. Within 30 days of the final judgment, he must also transfer $4.7 million into an escrow account that is agreed upon by Kwon and the commission staff.
Victory For SEC
From at least April 2018 up until May 2022, Terraform Labs and Kwon are accused by the SEC of illegally selling unregistered securities in the form of crypto assets and orchestrating a fraudulent scheme that resulted in a market loss of over $40 billion.
Further, authorities accused the defendants of deceiving investors regarding the reliability of TerraUSD, by incorrectly stating that Terraform Labs’ blockchain had been connected to widely-used Korean mobile wallets.
As a researcher looking into this development, I can assert that the SEC’s stance ultimately prevailed in the Terraform Labs case. Initially, both the company and its founder Do Kwon proposed civil penalties worth up to $3.5 million, with Do Kwon requesting a specific penalty of $800,000. However, the SEC’s position proved stronger, leading to a more substantial penalty.
At present, the Luna Classic token from the company is priced at $0.0001076, representing a approximately 8% increase within the past 24 hours.
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2024-06-12 21:26