Nikolas Sargeant
The settlement agreement, filed on Wednesday, comes after a New York jury found Kwon and Terraform Labs liable for civil fraud charges related to the $40 billion implosion of the Terra ecosystem in May 2022. The SEC urged the court to approve the settlement, stating it would send a "deterrent message" against misconduct and evasion of federal securities laws in the crypto space.
If approved, the settlement would require Kwon to pay at least $204.3 million from his personal funds, while the remainder would be paid by Terraform Labs. The penalty is lower than the SEC's initial $5.3 billion settlement offer but significantly higher than Terraform Labs' proposed $1 million civil penalty without disgorgement.
Kwon, currently in custody in Montenegro awaiting extradition decisions, did not attend the trial. Terraform Labs, which is under Chapter 11 bankruptcy protection with approximately $150 million in remaining assets, declined to comment on the proposed settlement or its implications for the company's future.
The settlement agreement highlights the SEC's crackdown on the crypto industry, aiming to set a precedent for enforcing securities laws in the rapidly evolving space.
