Crypto firm behind massive stablecoin collapse to pay $4.5 billion fine
Terraform Labs, the crypto company whose blowup helped kick off a crypto winter in 2022, agreed to an enormous fine on Wednesday.
Terraform Labs said it’d pay $4.47 billion in fines and penalties following a settlement with the SEC. The deal also requires the company to seek approval for its bankruptcy liquidation plan and close up shop “as soon as possible."
Terraform Labs first rose to fame with its algorithmic stablecoin terraUSD. The coin attempted to maintain a one-to-one peg to the US dollar, but its value proved to be anything but stable in May of 2022 when it collapsed dramatically. The fall wiped out $40 billion in investor value and caused a domino effect that brought down crypto hedge fund Three Arrows Capital and scores of other crypto projects.
Do Kwon, the company’s founder, was arrested in Montenegro in 2023 and convicted of using a fake passport. Both the US and South Korea are trying to extradite him to possibly face additional charges.
