New Terra (LUNA) Case Settlement with SEC: Gary Gensler Issues Statement
SEC Chairman Gary Gensler has released a statement regarding the recent developments in the Terra (LUNA) case, where Terraform Labs and founder Do Kwon agreed to pay over $4.5 billion following a unanimous jury verdict.
The verdict held them accountable for orchestrating a long-term fraud involving LUNA and UST crypto asset securities, causing significant losses for investors when the scheme was uncovered.
During the nine-day jury trial in April, it was revealed how Terraform Labs misused the Terraform blockchain for transactions and misled investors about the stability of their crypto asset security, UST. The decoupling of UST from the US dollar in May 2022 led to a sharp drop in prices, wiping out $40 billion in market value almost overnight.
This resulted in devastating losses for numerous investors, including individuals who had invested their life savings in Terraform’s ecosystem based on false information provided by the defendants.
In his statement, SEC Chairman Gary Gensler emphasized that the economic facts of a product determine its classification under securities laws, not labels or exaggerations. He condemned Terraform and Kwon for causing immense losses for investors, some of whom lost their entire life savings.
The SEC’s Enforcement Division Director, Gurbir S. Grewal, stated that Terra and Kwon orchestrated one of the largest securities frauds in US history by deceiving investors and inflating market value. As part of the settlement, Terraform agreed to pay compensatory damages, prejudicial interest, civil penalties, halt sales of cryptoasset securities, replace executives, and distribute remaining assets to investor victims and creditors through a liquidation plan, pending court approval in Terraform’s ongoing bankruptcy case.
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