Terraform Labs Settles With SEC For $4.4 Billion

The agency asked the federal judge to approve the settlement today.

By: Pedro Solimano Loading...

Terraform Labs Settles With SEC For $4.4 Billion

One of the largest collapses in the history of crypto is finally getting closure.

Terraform Labs, the company behind now-defunct UST stablecoin, has agreed to pay the U.S. Securities and Exchange Commission $4.47 billion. According to Bloomberg, the SEC asked a federal judge in the United States Southern District of New York to approve the settlement.

The deal comes two months after a unanimous jury decision that found Terraform Labs and its co-founder Do Kwon misled investors, acted recklessly, and were liable for civil fraud.

Terraform will pay roughly $3.59 billion plus interest, along with a $420 million penalty. Meanwhile, Kwon will pay $204.3 million, including $110 million in disgorgement, interest and an $80 million penalty, a court filing showed.

LUNA, the token of the Terra blockchain, is up 2.3% to $0.56. The network has shed nearly 50% of its value since the April jury decision, down to $384 million from $634 million.

LUNA Price - CoinGecko

Although these numbers are high, they are only a fraction of what Terraform wiped out of the market when it collapsed in May 2022.

In 2022, Terraform Labs – led by the now-detained Do Kwon – launched its native token, LUNA, and an algorithmic stablecoin, UST, which was backed by LUNA. UST lost its peg after a sharp drop in the price of LUNA, which caused a downward price spiral and run on deposits which wiped out nearly $50 billion of UST’s market cap in a matter of days.

The collapse inflicted such wounds that two years later, Terra-induced PTSD continues to sound the alarms on any project that offers double-digit yields.

However, the $4.4 billion settlement raises eyebrows. Many wonder whether Terraform Labs even has the money to pay off the debt.