The U.S. Securities and Exchange Commission (SEC) and Terraform Labs, along with founder Do Kwon, have reached a preliminary settlement concerning charges of misleading investors about TerraUSD.

Singapore-based Terraform Labs and Do Kwon have tentatively settled with the SEC regarding accusations of deceiving crypto investors before the 2022 collapse of the TerraUSD stablecoin. According to court documents, the settlement terms are not yet clear, although a jury previously found Kwon and Terraform Labs liable on civil fraud charges.

The SEC accused Terraform Labs and Kwon of misleading investors in 2021 about the stability of TerraUSD, a stablecoin designed to maintain its value at $1. The regulator also alleged that Kwon and the firm falsely claimed Terraform’s blockchain was used in a popular Korean mobile payment app.

The crypto community appears divided on the settlement’s implications. Some anticipate a positive impact on Terra Classic’s (LUNC) price, while others question how the firm plans to return the money.

“Lmao now LUNA2 will moon. Unbelievable coincidence 😀 😀 😀 “

Previously, the SEC demanded that Kwon and Terraform Labs forfeit $5.3 billion in alleged ill-gotten gains from stablecoin sales. It also sought fines of $420 million for the company and $100 million for Kwon, along with bans on dealing in crypto asset securities.

Following the news, LUNC surged over 9% to $0.00012, and the new token, LUNA, gained over 13%, according to CoinMarketCap.

The collapse of TerraUSD and Terra Classic disrupted cryptocurrency markets in May 2022, with the SEC estimating that investors lost over $40 billion. Kwon and his company argued that the maximum fines should be $3.5 million for Terraform Labs and less than $1 million for the TerraUSD mastermind.

Kwon, who faces criminal charges in the U.S. and South Korea, denies any wrongdoing. Arrested in March 2023, he is still awaiting extradition from Montenegro.

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