SEC Shares Compensation Claim Info For Terraform Fraud Victims

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Julia Smith

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Julia Smith

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Julia is an experienced editor with a passion for covering a wide variety of beats. She loves all things politics and regularly covers regulatory updates on emerging technology here for Crypto News.

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July 31, 2024

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The United States Securities and Exchange Commission (SEC) is now sharing information to help crypto victims affected by Do Kwon’s Terraform Labs collapse file compensation claims.

According to a post on the SEC’s website, the updated guidance is packed with “information intended to help answer those questions and contact information for questions related to the distribution process, which will be handled through Terraform’s bankruptcy case.”

SEC Provides Updated Info On Terraform Labs Compensation Claims

The helpful legal instructions come amid investors contacting the federal regulator about “their ability to receive compensation in light of the outcome in the Commission’s action against Terraform” in June of this year.

As part of its settlement deal with the SEC over its civil fraud case stemming from its dramatic algorithmic stablecoin collapse a few years back, Terraform Labs has agreed to pay almost $4.5 billion.

🚨NEW: The SEC has issued a notice to investors impacted by the downfall of Do Kwon’s Terraform Labs. According to the notice, Kwon is required to transfer a minimum of $204,320,196 to the Terraform bankruptcy estate to be distributed among affected investors. pic.twitter.com/81E0urhzqO

— Giannis Andreou (@gandreou007) July 30, 2024

Lawyers for the SEC argued that the decided financial judgment would “send an unmistakable deterrent message to not only those who engage in brazen misconduct, but also to all those who seek to evade federal securities laws by crafting new standards of behavior for crypto assets.”

While U.S. lawyers had originally requested a penalty of $5.3 billion against the company, Terraform Labs had proposed merely $1 million in fines.

As a part of the agreement, Terraform Labs founder Do Kwon will have to pay over $200,000 out of pocket.

Do Kwon In Legal Hot Water For TerraLuna Collapse, Facing Extradition

In April, both the now-debunked cryptocurrency exchange and Kwon were found liable for the cryptocurrency collapse that erased an estimated $40 billion from digital asset markets.

Kwon fled his native South Korea shortly following his crypto firm’s implosion, prompting a monthslong manhunt for the sham crypto tycoon around parts of Europe, Asia and the Middle East before he was ultimately captured in Montenegro for document forgery.

Though his Montenegrin prison time is complete, Kwon will remain in jail until a final decision is made about where he will be extradited to face criminal charges stemming from the crypto fraud scheme.

Both the United States and South Korea are currently battling for his extradition. However, the Terraform Labs founder is reportedly looking to be sent back to his home country, where he will likely face less criminal punishment.

However, it’s unclear what criminal charges the crypto fraudster will face in the future.