In relation to the collapse of New York virtual currency Terra and Luna, issuer Terraform Labs and co-founder Dohyung Kwon have reached a tentative agreement with the U.S. Securities and Exchange Commission (SEC) on the amount of recovery and fines.
According to trial records released by the U.S. District Court for the Southern District of New York, in the civil lawsuit filed by the SEC against Terraform Labs and Mr. Kwon, attorneys for both sides informed the court that they had reached an agreement in principle regarding the imposition of fines.
However, specific terms of the agreement, including the amount of the fine, have not yet been disclosed.
Both sides must submit documents related to the agreement to the court by June 12.
Previously, the SEC, the U.S. securities authority, filed a civil suit in November 2021, claiming that Kwon and Terraform Labs had deceived investors regarding the stability of Terra and caused a large investment loss.
This trial was a civil trial filed separately from the criminal trial filed against Mr. Kwon, and was conducted without the defendant attending in person.
Judge Jed Lakoff, who was in charge of the trial, previously acknowledged in December last year that Terra, a stable coin (a virtual currency designed to be pegged to the value of the U.S. dollar or the European Union's euro to minimize price volatility) constitutes a security, and Terra The SEC sided with Form Labs, which found that it violated securities laws by selling unregistered securities.
The jury also found Kwon and Terraform Labs responsible for defrauding investors.
After the jury's verdict, the SEC later claimed that a total of $5.26 billion (approximately 7.2 trillion won) should be imposed against Terraform Labs and Mr. Kwon, including illegal profit recovery and civil fines.
On the other hand, Kwon and Terraform Labs countered that there was no basis for the SEC's imposition of a refund, saying that most issuance and sales of virtual currency took place outside the United States.
Mr. Kwon has been detained in Montenegro since he was arrested on charges of passport forgery in March last year while running away.
Previously, when Mr. Kwon was arrested in Montenegro last year, prosecutors in New York indicted him on a total of eight charges, including securities fraud, fraud using communication networks, product fraud, and conspiracy to manipulate market prices.
Separately, Mr. Kwon has also been criminally indicted in Korea. The United States and South Korea are engaged in a tug-of-war to repatriate Mr. Kwon to their respective countries.
Amidst the repeated conflicting judgments of the Montenegrin judiciary on the issue of Mr. Kwon's extradition, there remains uncertainty as to where Mr. Kwon will ultimately be extradited to the United States or Korea.