Terraform Labs Pte. Ltd. and its co-founder, Do Kwon, have agreed to pay $4.47 billion to settle a lawsuit brought against them by the U.S. Securities and Exchange Commission following the collapse of its TerraUSD and Luna token in 2022.

The details of the settlement were listed in a court filing, which states that Terraform has agreed to pay $4.05 billion of disgorgement plus interest and a $420 million civil fine. Kwon is required to pay a civil fine of $80 million for his role in the downfall of the company.

Whether the amount will ever be paid, however, is another matter as Terraform filed for bankruptcy in January. Reuters reports that the fines will be treated as an unsecured claim against the Chapter 11 case, which Terraform is liquidating.

“Entry of this judgment would ensure the maximal return of funds to harmed investors and put Terraform out of business for good,” the SEC said in its filing. “Thus, this proposed judgment is fair, reasonable and in the public interest.”

Terraform, under the leadership of Kwon, oversaw one of the biggest meltdowns in cryptocurrency history when TerraUSD, a stablecoin pegged to the U.S. dollar, lost its peg. That caused a death spiral with UST’s sister currency Luna, which lost 99% of its value in less than a week, wiping out the combined $60 billion dollars of Terra’s market.

The crash subsequently led to investigations in the U.S. and South Korea, alleging that the company’s founders deceived investors with a flawed system involving the algorithmic stablecoin, which ultimately led to the collapse.

Kwon was subsequently arrested in Montenegro in March 2023 on an arrest warrant issued by South Korea and later charged by the U.S. SEC with “orchestrating a multibillion-dollar crypto asset securities fraud.”

The SEC alleged that Kwon raised billions of dollars from April 2018 until the collapse in May 2022 by offering numerous unregistered crypto securities that sought to earn a profit. The SEC said Kwon and Terraform marketed TerraUSD as a yield-bearing asset capable of generating up to 20% profits.

Kwon remains in Montenegro to this day, with both the U.S. and South Korea seeking his extradition.

Photo: Terraform