- The SEC filed a proposed final consent judgment on Wednesday, hoping to persuade Judge Jed Rakoff of the U.S. District Court for the Southern District of New York to accept the plan.
- In accordance with the proposed judgment, Terraform would be prohibited from Do Kwon serving as an officer or director of any public company, pay $3.58 billion in disgorgement, and pay a $420 million civil penalty.
Following a settlement with the U.S. Securities and Exchange Commission about its algorithmic stablecoin that experienced a sharp decline in value in 2022, Terraform Labs consented to pay $4.47 billion in fines.
The SEC filed a proposed final consent judgment on Wednesday, hoping to persuade Judge Jed Rakoff of the U.S. District Court for the Southern District of New York to accept the plan.
If accepted, the proposed judgment will create new guidelines for behavior for crypto assets that are governed by federal securities laws, thereby serving as a clear deterrent to those who engage in blatant misconduct as well as those who attempt to circumvent the requirements of the federal securities laws.
Following the cancellation of an oral argument, Terraform and its co-founder Do Kwon were able to strike a settlement in principle with the SEC in late May.
In accordance with the proposed ruling, Terraform would be required to pay $420 million in civil penalties, $3.58 billion in disgorgement, and prohibit Kwon from holding an officer or director position in any publicly traded company.
According to the SEC, Kwon would also be required to contribute roughly $204 million to a Terraform bankruptcy estate that would be distributed to injured investors.
In February 2023, Terraform and Kwon were charged by the SEC about the algorithmic stablecoin Terra USD (UST), which had crashed the previous year. According to the SEC, the company misled and deceived investors.
Both parties were fighting about fine amounts only a few months ago. The SEC has suggested that Terraform and Kwon pay $5.3 billion in fines, while their attorneys believe the penalties should be closer to $1 million.
An official from Terraform Labs declined to provide a statement.
In April, a jury found that both Terraform and Kwon had committed civil fraud by misleading investors. The main issues that the jury had to decide on were the SEC’s claims that Kwon and Terraform committed fraud in connection with the acquisition and sale of Terraform stocks.
Previously, Judge Rakoff awarded summary judgment in favor of the SEC, alleging that Terraform and Kwon issued and marketed unregistered securities.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
