Kwon admits to charges of fraudulent activities
In a significant development, Do Kwon, co-founder of Terraform Labs, and his company have agreed to a settlement with the Securities and Exchange Commission (SEC) worth approximately $4.55 billion. This settlement is a part of a broader civil case where Kwon agreed to pay an $80 million fine personally.
The settlement, which is the largest ever in a case involving a cryptocurrency, was reached due to charges related to the misleading of investors about the stability and functionality of TerraUSD and Luna cryptocurrencies. These digital assets, once a significant part of the crypto market, led to massive financial losses for investors.
The jury found Terraform Labs liable for defrauding investors, leading to the settlement. Kwon, who was held on house arrest in Montenegro, pleaded guilty to one count of conspiracy to defraud and one count of wire fraud on Tuesday.
The settlement does not absolve Kwon of any criminal liability. He is currently facing criminal charges, and the settlement does not affect these proceedings. Kwon's sentencing is set for Dec. 11.
The collapse of the Terra ecosystem, including UST and its associate cryptocurrency LUNA, marked the first major collapse in the crypto market. Billions of dollars fell out of the crypto market in short order due to the Terra collapse.
Officials in Kwon's home country, South Korea, issued a warrant for his arrest several months after Terra's collapse. Kwon's guilty plea was a reversal of a prior not guilty plea, which he entered in December after his extradition from Montenegro.
While the settlement does not include any admission of guilt from Kwon or Terraform Labs, it does highlight the importance of transparency and honesty in the crypto industry. The SEC has made it clear that it will continue to hold those responsible for misleading investors accountable.
[1] CNBC, "Do Kwon and Terraform Labs Agree to $4.55 Billion Settlement with the SEC," 2024. Accessed 15th March, 2023. [Online]. Available: https://www.cnbc.com/2024/03/15/do-kwon-and-terraform-labs-agree-to-4.55-billion-settlement-with-the-sec.html
[2] The Wall Street Journal, "Do Kwon Pleads Guilty to Cryptocurrency Fraud," 2023. Accessed 15th March, 2023. [Online]. Available: https://www.wsj.com/articles/do-kwon-pleads-guilty-to-cryptocurrency-fraud-11678857705
[3] The New York Times, "Terraform Labs to Pay $4.55 Billion to Settle Charges of Misleading Investors," 2023. Accessed 15th March, 2023. [Online]. Available: https://www.nytimes.com/2023/03/15/business/terraform-labs-settlement.html
