Terraform Labs, SEC Settle Charges, Cancel Oral Arguments

IconCryptoNewsTerminal Staff30 May, 2024

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Terraform Labs, SEC Settle Charges, Cancel Oral Arguments

Terraform Labs and its founder, Do Kwon, have reached an agreement in principle with the U.S. Securities and Exchange Commission (SEC), according to court filings reported by Coindesk. The agreement, filed on May 30, has canceled upcoming oral arguments. The settlement brings an end to the SEC's lawsuit against Terraform Labs and Kwon, which alleged that they misled investors about the stability of their algorithmic stablecoin, TerraUSD (UST). UST lost its peg to the U.S. dollar in May 2022, triggering a sell-off that wiped out billions of dollars in investor funds. The terms of the agreement have not been disclosed, but the parties are expected to submit a letter to the court by June 12 detailing the settlement. In late April, Kwon had opposed the SEC's proposed $53 million penalty, arguing that it was "excessive" and that any penalty for Kwon should be capped at $1 million. The settlement is a significant development in the ongoing regulatory crackdown on the cryptocurrency industry. It is the first time that the SEC has reached a settlement with a major stablecoin issuer.

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