Terraform Labs Agrees to US SEC Settlement of $4.4 Billion, But May Not Actually Pay Due to Bankruptcy

Terraform Labs, the creators of Luna token, has agreed to settle with the U.S. Securities and Exchange Commission (SEC) by paying a total of $4.47 million. This includes disgorgement of $4.05 billion and a civil penalty of $420 million, although it is unlikely that the full amount will be transferred as Terraform Labs has already gone bankrupt.

The founder of Terraform Labs, Do Kwon, himself has been fined $80 million and ordered to transfer $204.3 million to the fund.

The SEC alleges that Do Kwon and Terraform Labs deceived investors into believing that UST or TerraUSD could be pegged to the U.S. dollar, when in reality the process of pegging TerraUSD relied on pumping Luna coins to support its price. When attacked, the value of Luna decoupled in 2022, rendering Luna worthless.

Source: Reuters

TLDR: Terraform Labs settles with SEC for $4.47 million, founder fined $80 million and accused of deceiving investors about TerraUSD’s peg to USD.