Do Kwon, Terraform Labs Fined $4.5B in Criminal Case Over Terra Collapse
The U.S. authorities have launched a criminal prosecution against Do Kwon and Terraform Labs following the collapse of the Terra cryptocurrency. The case involves fraud allegations and a hefty fine.
Do Kwon, the founder of Terraform Labs, created the cryptocurrency Terra (LUNA) and its stablecoin UST. In 2022, a massive sell-off caused the collapse of both, leading to a $40 billion loss in value and triggering the FTX exchange collapse. The U.S. Securities and Exchange Commission (SEC) has since accused Kwon and his company of 'one of the largest securities frauds in US history', filing a lawsuit against them.
The court has ordered a fine of $4.5 billion, including $3.5 billion in restitution and over $460 million in interest. Additionally, $420 million in civil penalties have been imposed. Kwon and Terraform Labs are now banned from buying or selling cryptocurrencies and tokens, including those from the Terra ecosystem. According to a bankruptcy filing, Terraform Labs has only $150 million in assets left, making it challenging to cover the entire fine. Do Kwon is personally responsible for around $200 million of the fine, with the rest to be paid by the company.
Kwon was arrested in Montenegro with a fake passport and is currently out on bail, awaiting extradition. The highest court in Montenegro has approved his extradition to both South Korea and the USA.
The criminal case against Do Kwon and Terraform Labs is ongoing, with the fine potentially setting a new record for securities fraud penalties. The extradition process for Kwon is also underway, following his arrest in Montenegro.
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