Terra Currencies Surge Amid SEC Settlement News

Cryptocurrencies linked to the Terra ecosystem have experienced notable gains following the announcement of a tentative settlement between Terraform Labs, its founder Do Kwon, and the U.S. Securities and Exchange Commission (SEC).

The rejuvenated version of Terra’s cryptocurrency, LUNA, witnessed a 16.3% increase over the last 24 hours, currently trading at $0.69. Similarly, Terra Luna Classic (LUNC), which pertains to the original Terra ecosystem, saw a 9.5% rise, now trading at $0.0001215.

This upward trend in the market comes in the wake of a recent update from court proceedings, where it was revealed that both parties have “reached a settlement in principle.” The details emerged after the cancellation of a scheduled May 29 hearing due to ongoing settlement discussions, with a deadline set for June 12 to file related settlement papers.

The backdrop to this development involves a verdict from a New York jury in April, which found Do Kwon and Terraform Labs liable on civil fraud charges. The jury agreed with the SEC’s assertion that investors had been misled about the stability of Terra’s algorithmic stablecoin, TerraUSD (UST). While specific terms of the settlement have not been disclosed, the SEC had initially sought civil financial penalties and industry bans for Kwon and his company.

This legal turmoil originates from the dramatic collapse of TerraUSD and the LUNA governance token in May 2022, which erased over $40 billion in market value and triggered a prolonged crypto market downturn.

Although the settlement with the SEC represents a partial resolution to Kwon’s legal challenges, he continues to face a slew of other charges. These include criminal fraud allegations from the U.S. Department of Justice (DOJ), as well as accusations of fraud, bribery, transaction volume manipulation, and breaches of capital markets laws in South Korea.

After his arrest in Montenegro on charges involving a false passport in December 2023, Kwon has been at the center of an extradition tug-of-war between the U.S. and South Korea. Despite this, he has been released from prison in Montenegro after a four-month term but must remain in the country awaiting the extradition process.

The potential resolution with the SEC has sparked a rally in Terra-related cryptocurrencies, suggesting investor optimism about a possible stabilization in the legal landscape surrounding Terraform Labs and its embattled founder.