SEC Settles Terra LUNA Case with New Development Gary Gensler Issues Statement

Recent Update on the Terra (LUNA) Case Resolved with the SEC: Statement from Gary Gensler
SEC Chair Gary Gensler has issued a statement on the latest developments in the Terra (LUNA) case settlement. Here are the key points.
The U.S. Securities and Exchange Commission (SEC) disclosed today that Terraform Labs and its founder Do Kwon have agreed to pay over $4.5 billion as per a unanimous jury decision.
The jury found them guilty of conducting a long-term fraud scheme involving LUNA and UST crypto asset securities, leading to significant investor losses when the deception was uncovered.
During the nine-day jury trial in April, it was unveiled how the defendants misused the Terraform blockchain for transactions and misled investors about the stability of their crypto asset security, UST. After the detachment of UST from the US dollar in May 2022, the value of UST and other Terraform tokens plummeted, causing a loss of $40 billion in market value virtually overnight.
This resulted in severe losses for numerous investors, including individuals who had invested their savings in Terraform’s ecosystem, relying on false information provided by the defendants.
In response to the case, SEC Chair Gary Gensler emphasized, “The economic realities of a product, rather than its labels, speculations, or exaggerations, determine its categorization as a security under the securities laws.”
SEC’s Enforcement Division Director Gurbir S. Grewal commented on the fraudulent activities of Terraform and Kwon, stating, “Do Kwon and Terra executed one of the largest securities frauds in U.S. history by deceitfully claiming a legitimate use case for cryptocurrencies, ultimately deceiving investors and causing substantial financial harm.”
As part of the settlement agreement, Terraform agreed to pay compensatory damages, prejudicial interest, and civil penalties totaling over $4.5 billion. Additionally, Terraform will cease the sale of its cryptoasset securities, wind down its operations, replace key executives, and distribute remaining assets to affected investors and creditors through a court-approved liquidation plan in their ongoing bankruptcy proceedings.
*This content does not constitute investment advice.
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