Terraform agrees to pay nearly $4.5B in proposed judgment with SEC

The Securities and Exchange Commission asked the court to approve a final consent judgment in its case against Terraform Labs and its former CEO Do Kwon. 

The Wednesday filing says the US securities regulator and Terraform agreed that the former stablecoin issuer pay nearly $4.5 billion. The amount includes roughly $3.5 billion in disgorgement, more than $460 million in prejudgment interest and $420 million as a civil penalty. 

Kwon, the former chief executive, will pay $200 million to the Terraform bankruptcy estate. The company filed for bankruptcy at the beginning of this year ahead of its trial against the SEC. 

“The proposed consent judgment both addresses the magnitude of this fraud by imposing significant remedial, punitive, and deterrent remedies, including a multi-billion dollar judgment against Defendants, and provides for meaningful and speedy recovery for investor victims that collectively lost billions when Defendants’ scheme collapsed,” the SEC wrote.

The SEC didn’t immediately return requests for comment. A spokesperson for Terraform declined to comment.

The regulator said that its penalties – the aforementioned $420 million and Kwon’s $80 million — are “well within the statutory limits.”

The penalties “will send a clear deterrent message to those who might be contemplating similar fraudulent schemes: no matter what get-rich-quick profits they might achieve in the short-term, ultimately, they will be held to account. And these significant penalties are particularly warranted given the evidence at trial of the devastating losses to investors that resulted from Defendants’ fraudulent conduct,” the SEC continued.

Earlier this year, following a short trial, Terraform and Kwon were found liable for “intentionally and recklessly orchestrating one of the largest securities frauds in US history.”

Kwon is prohibited from serving as either an officer or director of a public company, the SEC said. 

The judgment, if approved by the court, ends the legal battle between the regulator and Terraform. Terraform’s algorithmic stablecoin, TerraUSD, collapsed in 2022, wiping billions from the crypto market.

---

Get the news in your inbox. Explore Blockworks newsletters:

• The Breakdown: Decoding crypto and the markets. Daily.
• 0xResearch: Alpha in your inbox. Think like an analyst.
• Empire: Crypto news and analysis to start your day.
• Forward Guidance: The intersection of crypto, macro and policy.
• The Drop: Apps, games, memes and more.
• Lightspeed: All things Solana.
• Supply Shock: Bitcoin, bitcoin, bitcoin.