In a surprising turn of events, Terraform Labs and its founder Do Kwon have reached a “settlement in principle” with the U.S. Securities and Exchange Commission (SEC) regarding accusations of misleading investors. This news sparked a temporary price surge for both Terra (LUNA) and Luna Classic (LUNC), the tokens at the center of the 2022 TerraUSD stablecoin collapse.
The SEC’s charges stem from the dramatic downfall of TerraUSD (UST), a stablecoin designed to maintain a 1:1 peg with the US dollar. When UST lost its peg in May 2022, it triggered a domino effect, sending the price of Luna (now LUNC) plummeting and causing billions in investor losses. The SEC estimates these losses to be over $40 billion combined.
According to court filings, the SEC seeks to recover $5.3 billion from Terraform Labs and Do Kwon, along with substantial fines. While the exact terms of the settlement remain undisclosed, the news injected a shot of optimism into the ailing LUNA and LUNC ecosystems.
Following the announcement, LUNA spiked by nearly 40%, reaching its highest price since December 2023. However, traders were quick to offload their holdings, pushing the price back down. LUNC mirrored LUNA’s price action, briefly jumping by 12% before retreating.
Do Kwon, currently residing in Montenegro, remains a central figure in the saga. Facing extradition requests from both South Korea and the US, he is stuck in a legal limbo, bouncing between jails and properties under supervised release. While Kwon’s lawyers successfully appealed an initial extradition order, the Montenegrin High Court is now determining the validity of a century-old extradition treaty. Kwon maintains his innocence and awaits a final decision on his extradition.
Also Read:Terra Classic (LUNC) Price Rollercoaster: Can Bulls Push for a Breakout?
The Terraform Labs settlement with the SEC signifies a potential turning point for the company and its beleaguered tokens. However, the future of LUNA and LUNC remains uncertain, heavily influenced by the ongoing legal proceedings surrounding Do Kwon and the broader market sentiment towards cryptocurrencies.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses
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