Terraform Labs and its founder Do Kwon have agreed to settle with the US Securities and Exchange Commission (SEC) over allegations of fraud. The settlement, which was filed in court on Thursday, comes after a jury found Terraform Labs and Do Kwon guilty of fraud in April this year. The SEC had been seeking a $5.3 billion penalty, but the settlement reduces this to $138 million in fines.

Terraform Labs and Do Kwon were found liable for fraud in relation to the collapse of TerraUSD in 2022. The collapse led to a meltdown in the cryptocurrency market, with many investors losing significant amounts of money. The SEC's case against Terraform Labs and Do Kwon alleged that they had engaged in a scheme to defraud investors by misrepresenting the stability and security of TerraUSD.

The settlement is a significant development in the case, as it brings an end to the legal proceedings against Terraform Labs and Do Kwon. However, it is worth noting that the settlement does not necessarily mean that Terraform Labs and Do Kwon admit to any wrongdoing. The settlement is likely a strategic move to avoid further legal costs and reputational damage.

In a statement, Terraform Labs said that they were "very disappointed" with the verdict and did not believe it was supported by the evidence. They also maintained that the SEC did not have the legal authority to bring the case in the first place.

Do Kwon, who is wanted in the US and South Korea, remains in Montenegro, where he was arrested in 2023. He is currently out on bail.

The settlement is a significant development in the cryptocurrency market, as it highlights the need for companies to comply with securities laws and regulations. It also serves as a warning to other companies in the space that the SEC is taking a closer look at their activities and will not hesitate to take action if they engage in fraudulent behavior.

In other news, the price of LUNA and LUNC tokens rose significantly on the news of the settlement, with LUNA rising 30% and LUNC rising 10%. However, both tokens have since pared some of their gains and are currently trading at 20% and 6% up in the past 24 hours, respectively.

Before the collapse of TerraUSD, LUNA traded at highs of $119 in April 2022. The token's price has been highly volatile in recent months, and it remains to be seen how it will react to the settlement.

Overall, the settlement between Terraform Labs and the SEC is a significant development in the cryptocurrency market, and it highlights the need for companies to comply with securities laws and regulations. It also serves as a warning to other companies in the space that the SEC is taking a closer look at their activities and will not hesitate to take action if they engage in fraudulent behavior.