Crypto firmTerraform Labs agrees to pay $4.5 Billion to SEC one of the largest penalties of any SEC civil lawsuit

Crypto Exec Do Kwon’s company, Terraform Labs, agreed to settle a civil securities-fraud lawsuit, consenting to pay the Securities and Exchange Commission just under $4.5 billion and wind down its operations.

Founder Do Kwon agreed to pay $204 million as part of the deal. Terraform Labs is in bankruptcy proceedings and says it has less than half a billion dollars in assets.

A New York jury in April found Kwon and Terraform Labs liable for securities fraud after a two-week civil trial. The SEC brought the enforcement action as part of a yearslong effort to rein in crypto’s Wild West actors.

Terraform filed for bankruptcy in January.

Under the proposed deal with Kwon, the fallen crypto tycoon would transfer the $204 million directly to the Terraform bankruptcy estate for distribution to harmed investors. 

In a parallel case, federal prosecutors in New York have charged Kwon with eight criminal counts of fraud. Kwon has denied committing fraud. 

Based in Singapore at the time of the TerraUSD-Luna crash, Kwon disappeared in September 2022, just before South Korean authorities obtained a warrant for his arrest. Officials say he fled to Serbia. In March 2023, Kwon was arrested at an airport in neighboring Montenegro while trying to board a private jet to Dubai with a fake Costa Rican passport.

Jeffrey Newman is a whistleblower lawyer, whose firm represents whistleblowers in healthcare fraud cases under the False Claims Act (FCA) and also under the Securities and Exchange, FINCEN and CFTC whistleblower programs. He can be reached at Jeff@JeffNewmanLaw.com or at 617-823-3217