Singapore-based Terraform Labs and its founder, Do Kwon, have agreed to settle a civil lawsuit with the SEC in the US, resolving allegations of deceiving crypto investors. This resolution follows a jury finding Terraform Labs and Kwon liable for civil fraud in April in the US District Court for the Southern District of New York.

Details of the settlement have not been disclosed yet. The tentative agreement was reported on a court website, with US District Judge Jed Rakoff instructing both the SEC and the defendants to submit supporting documents by June 12.

The SEC's lawsuit accused Kwon and Terraform Labs of misleading investors regarding the stability of their stablecoin, TerraUSD, and falsely claiming their blockchain technology was integrated into a major Korean mobile payment app. This alleged deception led to the collapse of TerraUSD and its native token LUNA in May 2022, causing estimated investor losses exceeding $40 billion. The SEC described the incident as a significant fraud that erased tens of billions in market value virtually overnight.

Initially seeking substantial financial penalties, including $5.3 billion in allegedly ill-gotten profits and fines totaling $520 million for Terraform Labs and Kwon, the SEC's claims were contested. Kwon and his company argued for much lower maximum fines, capped at $3.5 million for Terraform Labs and under $1 million for Kwon.

Kwon is also facing related criminal charges in the US and South Korea but has denied any wrongdoing. He was arrested in Montenegro in March 2023 for attempting to leave the country using falsified documents. Pending extradition proceedings, Kwon remains in custody in Montenegro, awaiting a decision on whether he will be sent to the US or South Korea.

The settlement marks a significant step toward addressing the aftermath of one of the crypto market's most notable collapses and underscores the SEC's commitment to holding accountable those involved in fraudulent activities within the cryptocurrency sector.