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Terraform and Kwon to Pay $4.5 Billion for fraud case result

Company and owner pay $4.5 billion to settle the results of a fraud case

Terraform Labs PTE, Ltd. and Do Kwon have agreed to pay $4.5 billion to settle the results of a fraud case.

According to a statement by the Securities and Exchange Commission (SEC), both entities have been found guilty of securities fraud on a mass scale, underscoring the authority’s crucial role in laying down the ban hammer to illegal practices.

“Today’s multi-billion dollar settlement not only holds them accountable and prioritizes the return of hundreds of millions of dollars to harmed investors, but also makes clear that, despite the vast resources that crypto asset defendants deploy against us, the dedicated staff of the Division of Enforcement will not stop until they achieve justice for the victims of these breathtaking frauds,” said SEC’s Division of Enforcement Director Gurbir S. Grewal.

Terraform and Kwon caught red-handed

As we reported in April, Kwon and Terraform Labs were the subjects of the government watchdogs’ root and stem inquiry.

The Southern District of New York’s District Court decided on a guilty verdict after a nine-day trial into Kwon and the company’s illicit practices.

The original complaint filed by the SEC on February 28, 2023, stated that Kwon and Terraform had sold crypto assets from 2018 to 2022 in unregistered transactions and would perpetrate a fraudulent scheme that would lead to a devastating loss of $40 billion in market value to retailers and investors.

At the time of the court decision, we still waited for the sentencing and fate of Kwon and Terraform. Once the jury verdict results hit, Director Grewal was scathing in his view of the company and the doggy owner.

At the time, he said that Terraform “caused devastating losses for investors and wiped out tens of billions of market value nearly overnight. For all of crypto’s promises, the lack of registration and compliance have very real consequences for real people.”

Terraform and Kwon to pay the price

The court has ordered Terraform to pay $3,586,875,883 in disgorgement. $466,952,423 in prejudgment interest, and a $420,000,000 civil penalty.

Kwon, however, will pay $110,000,000 in disgorgement and $14,320,196 in prejudgment interest on a joint and several basis with Terraform, and a $80,000,000 civil penalty.

Terraform will be monitored by the court as all assets of the illicit company are wound down and a liquidation plan is in place. This will share the remainder of Terraforms ill-gotten gains with the victims of this fraud case.

Image: Ideogram.

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