The US Securities and Exchange Commission (SEC) has taken action to address the collapse of Terraform Labs and provide compensation to investors who suffered losses. In a settlement finalized in June, Terraform Labs agreed to pay $4.47 billion, including disgorgement fines, a civil penalty, and prejudgment interest. The SEC has assured investors that it will not collect any funds until they are fully compensated in the bankruptcy case.
The SEC’s information page outlines the compensation process and informs investors that a bankruptcy plan confirmation hearing is expected in fall 2024. This will allow creditors and investors to review and raise objections to the plan as the case progresses. Terraform Labs and its co-founder Do Kwon were sued by the SEC in 2023 for orchestrating a multi-billion dollar crypto asset securities fraud, specifically involving TerraUSD (UST) and Terra (LUNA). In April of this year, a jury found Terraform Labs and Kwon guilty of misleading investors and held them liable for civil fraud.
Overall, the SEC’s efforts aim to guide investors through the compensation process and provide clarity during this challenging time. Stay informed and stay tuned for updates as the bankruptcy case unfolds.
