The SEC has created an information page for investors affected by Terraform Labs, detailing compensation procedures following a recent settlement.
Points
- Terraform Labs agreed to pay $4.47 billion in a settlement.
- Investors and creditors will be paid in full before SEC receives payments.
- Chapter 11 plan confirmation hearing expected in the fall.
- SEC and CFTC issued warnings about crypto-related fraud.
The U.S. Securities and Exchange Commission （SEC） has launched an information page for investors affected by Terraform Labs, the company behind the algorithmic stablecoin Terra USD （UST） that collapsed dramatically. The SEC has received numerous inquiries about compensation following a settlement agreement last month.
Terraform Labs has agreed to pay $4.47 billion as part of the settlement, including $3.58 billion in disgorgement and $420 million in a civil penalty. Importantly, the settlement terms require that investors and creditors are paid in full before the SEC receives any payments. The Chapter 11 plan confirmation hearing and the start date are anticipated for the fall.
In February 2023, the SEC charged Terraform Labs and its co-founder Do Kwon with civil fraud, accusing them of misleading investors about the stability of UST and the linked governance token, Luna. A jury found both parties liable in April, concluding that they had deceived investors and caused substantial financial losses.
Additionally, the SEC has warned investors about the prevalence of fraud in the crypto space, advising caution and thorough research before engaging in crypto investments. The U.S. Commodity Futures Trading Commission （CFTC） also issued a customer advisory on “follow-on frauds,” which often target victims of initial fraud schemes with promises of fund recovery.
解説
- Investor Compensation: The SEC’s information page aims to provide clarity and guidance to affected investors, ensuring they understand the process for receiving compensation from the settlement.
- Regulatory Actions: The actions taken by the SEC and CFTC highlight the ongoing challenges in the cryptocurrency market, particularly related to fraud and investor protection. These regulatory measures are crucial for maintaining market integrity and protecting investors.
- Market Impact: The collapse of Terraform Labs and the subsequent legal actions serve as a cautionary tale for investors, emphasizing the importance of due diligence and the risks associated with algorithmic stablecoins and other crypto assets.