Terraform Labs and co-founder Do-Hyung Kwon have reached a preliminary agreement with the SEC on fines and penalties related to the collapse of the cryptocurrency Terra-Luna.

Court records from the U.S. District Court for the Southern District of New York reveal an agreement in principle, with settlement documents due by June 12. Specific terms, including the fine amount, are not yet disclosed.

The SEC filed a lawsuit against Kwon and Terraform Labs in November 2021, alleging they misled investors about Terra's stability, resulting in over $40 billion in losses. Judge Jed Leikoff ruled that Terra, a type of stablecoin, was a security, siding with the SEC. The jury found Kwon and Terraform Labs liable for defrauding investors, leading the SEC to seek $5.26 billion in penalties.

Kwon, arrested in Montenegro last year for passport forgery, faces multiple fraud charges in the U.S. and South Korea. His extradition is still being contested between the two countries.

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