Singapore-based Terraform Labs and its founder Do Kwon have reached a preliminary agreement with the US Securities and Exchange Commission (SEC).
Terraform Labs and Do Kwon have nearly settled the fraud case, court documents say.
What's happened
U.S. District Judge Jed Rakoff in Manhattan has reportedly asked the SEC and the defendants to file documents in support of the settlement by June 12. It is then that the terms of the deal will become known.
In April the jury found Kwon and Terraform are guilty of civil fraud charges, agreeing with the Commission. The regulator demands that the cryptocurrency platform pay a fine of $5.3 billion. The platform insists on paying $1 million. The SEC also asks the court to ban the company and its founder from ever working in the securities industry.
The collapse of the Singaporean firm and its stablecoin TerraUSD in May 2022 led to the market plunging into a prolonged crypto winter that affected a huge number of crypto projects and investors.
The SEC charged Terra and Kwon with fraud and violations of securities laws. The regulator claims that the site was selling unregistered securities, including the LUNA cryptocurrency and the UST stablecoin. The Commission estimates that the damage from the collapse of TerraUSD amounted to more than $40 billion.
The founder of the Singapore company was arrested in March 2023 for attempting to leave Montenegro using false documents. Currently, two countries are seeking his extradition: the United States and South Korea. In the latter, Kwon faces up to 40 years in prison for financial fraud.
LUNA and LUNC react with growth
Cryptocurrencies associated with the Terra ecosystem showed strong growth amid news of a potential settlement. According to CoinGecko, LUNA quotes jumped 14.7%. At the time of writing, the token is trading at $0.6769 with a capitalization of $467 million.
Meanwhile, Terra's native token, Terra Luna Classic (LUNC), rose 8.8% to $0.0001204. The market value of the asset is more than $704 million.
Daily trading volumes for LUNA and LUNC soared by 696% and 271%, respectively.
Source: Cryptocurrency
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