- Terraform Labs, the company behind the catastrophic 2022 collapse of TerraUSD and Luna, has finally settled with the SEC as bankruptcy proceedings come to a close.
- The business, headed by Do Kwon, agreed to a suspended US $4.47 billion fine.
- The fine is only to be paid back after eligible customers are refunded for losses incurred by the 2022 de-pegging.
- Do Kwon remains a wanted man by South Korean and US authorities on criminal charges.
The Terraform Labs collapse in 2022 sparked one of the crypto market’s biggest downturns in recent history. The calamitous failure of the TerraUSD stablecoin wiped US $40b (AU $58b) from investors’ pockets when the token de-pegged from its underlying asset.
The collapse had a significant ripple effect, with Terraform Labs and its founder, Do Kwon, facing a lengthy legal battle with US and South Korean prosecutors.
However, more than two years after the disaster, it appears at least one prong of the court proceedings is wrapping up, with Terraform Labs receiving approval for its bankruptcy plan.
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Terraform Labs to Repay Hundreds of Millions to Victims
Terraform Labs finalised its settlement with the US Securities and Exchange Commission (SEC) yesterday, paying up a fine of US $4.47b ($6.5b). Earlier this year, a Manhattan court found the company was liable for “defrauding investors” following TerraUSD’s collapse in 2022.
The bankruptcy plan estimates around US $2-400m (AU $3-600m) can be paid back to victims of the 2022 collapse as part of the company’s ongoing liquidations.
Additionally, the billions owed to the SEC is unlikely to be recouped by the regulators, with the settlement agreeing that Terraform Labs will pay back customers before other debts.
Do Kwon Maintains Innocence Despite Arrest
Do Kwon, head of Terraform Labs, is still being pursued by US and South Korean authorities for his role in the collapse of UST and associated coin Luna.
While Kwon and his company have faced the civil court, he has yet to endure the criminal charges dealt by the two nations.
Do Kwon has maintained his innocence, despite an arrest and extradition by Montenegrin customs earlier this year after attempting to travel with falsified identification.
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