Terraform Labs and Do Kwon have agreed to settle their case with the US Securities and Exchange Commission (SEC), according to new court documents .
Court records show that an oral hearing between Do Kwon, Terraform Labs and the SEC scheduled for May 29 was canceled “because the parties informed the Court that they had reached a settlement in principle.”
Both parties have until June 12 to file the documents necessary to effectively finalize the agreement.
The SEC originally proposed a massive $5.3 billion fine against Kwon and his company Terraform Labs. Last month, Kwon rejected the hefty fine, however, requesting a maximum penalty of $1 million.
Similarly, the federal regulator demanded that Kwon be banned from serving as a securities officer and director of any securities issuer, while requiring the disgraced former CEO to hand over his personal accounts.
Kwon’s lawyers argued that doing so would violate their client’s 5th Amendment rights, potentially subjecting him to prosecution.
Where will Kwon be extradited after serving his sentence in a Montenegrin prison?
The news of the settlement comes just a month after Kwon was found responsible for embezzling $40 billion from cryptocurrency markets following the collapse of his algorithmic stablecoins Terra and Luna in May 2022.
“We allege that Terraform and Do Kwon failed to provide the public with the full, fair and truthful disclosure required for a number of crypto asset securities, particularly LUNA and Terra USD,” – SEC Chairman Gary Gensler said in a February 2023 statement . “We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses to investors.”
Following the announcement, Terra’s price rose dramatically by more than 16.5%. Meanwhile, Kwon is being held in Montenegro, where both the United States and his native South Korea are fighting for his extradition.
The former founder and CEO was originally arrested in the Balkans in March 2023 for falsifying travel documents while attempting to flee Montenegro after a months-long search that included parts of Europe and Asia.
Earlier this month, the Montenegrin Court of Appeals halted his potential extradition after an appeal by his lawyers. The decision will now be reviewed by the country’s High Court.
If approved, the settlement will end a dramatic legal dispute between the federal regulator and Kwon and his company. The terms of the settlement have not yet been made public.
