Just In: Terraform Labs To Cease Operations After SEC Settlement

Terraform Labs, the blockchain protocol created by crypto fraudster Do Kwon, is formally shutting down after agreeing to pay $4.5 billion to the United States Securities and Exchange Commission (SEC) to settle its civil fraud suit on June 12, the company’s current CEO Chris Amani revealed.

Terraform Labs CEO Reveals Company Is “Winding Down”

In series of X posts published by Amani on Tuesday, Terraform Labs “always intended to dissolve at some point” and is now “winding down operations completely” in light of its settlement with the SEC.

According to Amani, what remains of the now bankrupt crypto company will be sold to digital asset portfolio manager Pulsar Finance, wen3 interface Station Wallet, and DAO management firm Enterprise Protocol.

“I’m incredibly proud that we were able to hold this company and ecosystem together and continue to build innovative products through all of this,” Amani wrote. “We were well positioned to accelerate things if we had won the trial, but unfortunately we lost and as a result, can no longer operate.”

Do Kwon Versus The SEC

The SEC’s $4.5 billion fine against Kwon and his now disgraced Terraform Labs announced Wednesday is a not insignificant drop from the $5.3 billion originally requested by the federal regulator in April.

Lawyers for Kwon pushed back against the SEC’s original request and argued that Kwon should only face a maximum penalty of $1 million despite costing $40 billion to be wiped from the crypto market.

“If approved, the proposed judgement will send an unmistakable deterrent message to not only those who engage in brazen misconduct, but also to all those who seek to evade the requirements of the federal securities laws by crafting new standards of behavior for crypto assets that fall under the purview of federal securities laws,” lawyers for the SEC wrote in a letter accompanying Wednesday’s settlement agreement .

Where To Next?

News of Terraform Labs’ settlement and subsequent shuttering comes just two months after Kwon was found liable for causing algorithmic stable coins Terra and Luna to crash in spring 2022.

Following the crash, Kwon remarkably evaded authorities for months by hiding out in various locations across Europe and Asia before ultimately getting caught in Montenegro last spring when he tried to board a plane out of the country using fraudulent documents.

Kwon has since been held in the Balkan country as he awaits potential extradition to the United States or his native South Korea, with both countries fighting over where Kwon will be sent to face further consequences for his massive crypto fraud scheme .

More information on the crypto company’s shutdown will reportedly be made available in the coming weeks.