Terraform Labs to sell four subsidiaries to cover SEC fine

TFL will pay the regulator $4,5 billion as part of the settlement agreement

11.07.2024 - 10:00

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What’s new? Terraform Labs (TFL), which developed the Terra blockchain with the UST and LUNA tokens, is exploring options to sell four subsidiaries to cover a $4,5 billion fine. The fine was part of its peace agreement with the US Securities and Exchange Commission (SEC) in a fraud case.

Press release

What else is known? On July 9, TFL officials announced that they are looking for a buyer for crypto portfolio tracker Pulsar Finance, crypto wallet platform Station, smart contract automation protocol Warp, and Enterprise, a platform designed to manage decentralized autonomous organizations (DAOs). The sale will be handled by investment bank CAVU Securities.

The company added that the sale is designed to maximize value for creditors and shareholders and is part of a broader wind-down of operations under the terms of its agreement with the SEC.

TFL agreed to pay a fine to dismiss the proceedings on charges of securities law violations and fraud. TFL co-founder and former CEO Do Kwon also agreed to pay $204,3 million.

SEC has provided Montenegro’s Ministry of Justice with materials on the Terra creator’s fraud case

The Ministry of Justice has not yet decided whether the businessman will be extradited to the US or South Korea

Kwon is currently in Montenegro where, after serving a prison sentence for passport fraud, he is awaiting a decision on whether to be extradited to the United States or South Korea, of which he is a citizen. He faces class action fraud lawsuits in both countries over the collapse of UST and LUNA, which caused multi-billion dollar losses to investors.

Fintech company Ripple, which developed the payment protocol and the XRP token of the same name, invoked the TFL and SEC agreement to reduce the amount of the fine sought by the regulator from $2 billion to $10 million. Ripple noted that XRP investors did not suffer losses, and the company itself, unlike TFL, was not accused of fraud.

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