Terraform Labs, the Do Kwon-led startup behind the collapsed LUNA cryptocurrency and TerraUSD (UST) stablecoin, has agreed in principle to a settlement with the United States Securities and Exchange Commission (SEC) over fraud charges.
News of the tentative settlement was first reported by Reuters. The court listing for the case notes that all parties informed the court of an agreement in principle, with filings in the matter due by June 12.
Kwon and Terraform Labs were found guilty by a jury of civil fraud charges in April and declared liable for defrauding investors about the coins. Today’s settlement would likely determine how much Kwon and the firm have agreed to pay following the April verdict, and could also pertain to Kwon’s future in finance.
Prior to settling, the SEC sought civil financial penalties from Kwon and Terraform, and orders barring the South Korean entrepreneur and his company from ever operating in the securities industry again.
The collapse of UST and LUNA in May 2022 not only led to losses of some $40 billion; it also triggered an industry-wide "crypto winter" that persisted for at least a year and a half.
Thursday's settlement news marks some resolution to just one of Kwon’s myriad legal battles. The U.S. Department of Justice (DOJ) has charged the crypto founder with criminal fraud for his involvement in Terraform’s rise and collapse. Kwon’s native South Korea has separately charged him with financial crimes including fraud, bribery, manipulating transaction volume, and violating capital markets laws.
Both governments have been in a tug-of-war over Kwon ever since the fallen mogul was arrested in Montenegro on false passport charges in December 2023. For the last six months, both the United States and South Korea have attempted to extradite the crypto founder, in a Kafkaesque series of approved—then rejected—requests.
In late March, Kwon was released from prison after serving a fourth month sentence for carrying a false passport. He is to remain in Montenegro until the matter of his extradition is resolved.
Editor's note: This story was updated with additional details after publication.