Do Kwon Reaches Settlement with SEC

The last cycle's most infamous figures continue to face legal reckonings with news that Terraform Labs founder Do Kwon has "reached a settlement in principle" with the U.S. Securities Exchange Commission, according to a court document.

What's the scoop?

• Background: In February 2023, the SEC charged Terraform and Do Kwon over the collapse of LUNA and the algorithmic stablecoin UST, which saw $50B vanish over three days in May 2022. 
• Court Proceedings: A telephone conference was held on Wednesday which resulted in a “settlement in principle,” meaning both parties had come to an agreement on a settlement, though no binding agreement has been made. As a result, a planned oral argument set for yesterday, May 29th, was canceled.
• The Trial and Next Steps: The trial started in late March without Kwon, who remains in Montenegro under conflicting extradition requests from the US and South Korea. In April, a jury found Do and Terraform Labs liable for civil fraud, leading the SEC to seek $5.3B in fines, while Terraform and Kwon's lawyers argued for closer to $1M. Both parties must file papers supporting a proposed final judgment by June 12, 2024.

Bankless Take:

Luna recklessness brought massive damage to the crypto space, a swift resolution to this saga could bring the industry peace of mind, especially after the drawn-out back and forth regarding Do Kwon’s potential extraditions. Though given the chase the US has been giving him for over a year, this settlement — in principle — seems sudden. As with SBF, while many people in the industry would be happy to see him behind bars, when taken with the SEC’s recent behavior, it seems like the agency wants a quicker low-profile conclusion to the matter. While we will know more about the individual agreement terms in coming weeks, the SEC seems to be reducing its time in the spotlight, news that could play out well for Do Kwon.