Recently, it was reported that Kwon Do-Hyung, the CEO of Terraform Labs and a key figure in the Terra-Luna collapse, has agreed to pay $4.5 billion (approximately 5.9 trillion won) in a settlement with U.S. authorities. This settlement is related to allegations that Kwon and Terraform Labs misled investors about the success and stability of Terra and Luna.
Overview of the Terra-Luna Collapse
Kwon Do-Hyung was identified as the main culprit in the Terra-Luna collapse in 2022, which caused damages amounting to approximately 52 trillion won. Terra and Luna, developed by Terraform Labs, initially saw significant success and attracted many investors, but their sudden collapse resulted in substantial losses. The jury in the Manhattan court in New York found that Kwon and Terraform Labs misled investors with false information.
Settlement Details
According to documents submitted by the U.S. Securities and Exchange Commission (SEC) to the court, Kwon Do-Hyung and Terraform Labs have agreed to return approximately $4.5 billion (about 5.9 trillion won), which includes ill-gotten gains and interest from the Terra-Luna collapse. This settlement amount is intended to address the damages caused by the collapse.
In addition to this settlement amount, Kwon Do-Hyung is required to pay a separate civil penalty of $420 million (about 560 billion won). Thus, the total amount Kwon has to pay reaches approximately 6.46 trillion won.
Future Outlook
As part of the settlement, Kwon Do-Hyung is prohibited from participating in any digital asset securities transactions in the future. This means that his activities in the cryptocurrency market will be completely restricted.
Kwon Do-Hyung was arrested in Montenegro at the end of 2023 on charges of using a forged passport and is currently detained there. It has not yet been decided whether Kwon will be extradited to South Korea or the United States, where he faces charges in both countries.
Conclusion
The Terra-Luna collapse had a significant impact on the cryptocurrency market and caused enormous losses to many investors. This settlement provides an opportunity for some restitution to the victims. However, efforts to enhance transparency and regulation in the cryptocurrency market must continue to prevent such incidents from occurring again.
The news of Kwon Do-Hyung's settlement serves as a stark reminder to the cryptocurrency market, emphasizing the importance of cautious investment and thorough verification of information for investors.
