'Tera Scandal' Fine of 6 Trillion Won... Kwon Do-hyung Reaches Payment Agreement with US SEC

Regarding the collapse of the cryptocurrency Terra and Luna, the issuer Terraform Labs and Do-hyung Kwon have agreed to pay $4.47 billion (approximately 6.1284 trillion KRW) in disgorgement and fines to the U.S. Securities and Exchange Commission (SEC), Bloomberg reported on the 12th (local time).

According to court records from the U.S. District Court for the Southern District of New York, the SEC has requested the court’s approval of this settlement in the civil lawsuit filed against Terraform Labs and Kwon.

Kwon Do-hyung, CEO of Terraform Labs, is heading to the Podgorica District Court in the capital of Montenegro.
[Photo by Yonhap · Vesti]

The amount includes $4.05 billion in disgorgement and interest, and $420 million in civil penalties.

Initially, the SEC claimed that Terraform Labs and Kwon should be required to pay a total of $5.26 billion in disgorgement and civil penalties. In its brief, the SEC stated that "Kwon and Terraform Labs obtained over $4 billion in ill-gotten gains through unlawful conduct," and that the penalty amount is a "reasonable approximation."

Terraform Labs argued that most of the cryptocurrency issuance and sales occurred outside the United States, and therefore the SEC has no grounds to impose fines or penalties.

Earlier, in November 2021, the SEC filed a civil lawsuit alleging that Kwon and Terraform Labs deceived investors regarding Terra’s stability, causing significant investment losses. The defendant was not required to appear in person, so the case proceeded in absentia without Kwon. This trial is separate from the criminal case filed against Kwon.

Kwon was arrested and detained in Montenegro in March last year on charges of passport forgery while on the run. Last year, the New York prosecutor indicted Kwon on eight charges including securities fraud, wire fraud, commodity fraud, and conspiracy to manipulate the market. Kwon has also been indicted in South Korea, but his custody status has not yet been determined.