Terraform Labs has reached a settlement with the United States Securities and Exchange Commission (SEC), agreeing to pay around $4.47 billion. This decision follows a jury finding Terraform Labs and its co-founder responsible for the collapse of the Terra ecosystem, which resulted in a $40 billion loss for investors.
Terraform Labs to Cease Operations
Chris Amani, CEO of Terraform Labs, announced that the company will stop its operations after the settlement. The firm plans to sell major projects within the Terra ecosystem and transfer control of the Terra blockchain to the community.
Ripple Seeks Reduced Penalty in SEC Case
In related news, Ripple’s legal team has requested a court to impose a “reasonable” civil penalty in its case with the SEC, following the Terraform Labs settlement. The SEC has demanded that Ripple pay about $2 billion in various penalties. Ripple contends it should pay no more than a $10 million fine.
The SEC disagreed with Ripple’s comparison of penalties. Ripple argued that Terraform’s $420 million penalty was just 1.27% of its “$33 billion gross sales.” The SEC countered that it measured Terraform’s penalty against its “gross profit from the violative conduct,” estimated at over $3.5 billion — about 12%.
The SEC claimed that if the same ratio were applied to Ripple’s gross profits of $876.3 million, the penalty would be $102.6 million. The SEC maintained that such a low penalty would not meet the objectives of civil penalty laws.
