Crypto-failure Terraform Labs to cough up $4.5B, liquidate self
Terraform Labs, creator of TerraUSD, must pay $4.5 billion to settle SEC charges after the stablecoin's crash. Co-founder Do Kwon faces legal consequences, and the company will shut down.
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Terraform Labs, the company behind the TerraUSD stablecoin crash, has been ordered by the SEC to pay $4.5 billion to creditors and authorities before shutting down. The firm gained attention in 2022 when the value of TerraUSD plummeted from $1 to nine cents, despite being marketed as a stablecoin pegged to the US dollar. The failed protocol aimed to keep TerraUSD's price stable but faced scalability issues during a market panic, resulting in over $42 billion in losses. Co-founder Do Kwon faced legal troubles, including a securities fraud case, and the SEC announced a settlement requiring Terraform Labs to pay disgorgement, interest, and penalties. The company will cease operations, replace directors, and distribute remaining assets to investors and creditors. Kwon will personally pay a significant sum as part of the settlement. The SEC emphasized that economic realities, not labels or hype, determine whether a product is a security under the law.
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5 commentsPeople kept telling me, "These companies have billions of dollars invested in them, they're rock solid, its a great investment." And then you keep seeing these crypto companies who are valued in the billions continually going under and taking investors money with them.
I've always admired what crypto was aiming to achieve, but stuff like this hinders their effort for people to take this stuff seriously and get involved.
Was this an actual technical problem or was this a bank run?
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