Coinbase CLO Criticizes SEC’s Deal with Kwon and Terraform

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Coinbase CLO Criticizes SEC’s Deal with Kwon and Terraform



Coinbase’s Chief Legal Officer Paul Grewal criticized the Securities and Exchange Commission’s (SEC) $4.47 billion settlement with Do Kwon and the now-bankrupt Terraform Labs.

Grewal expressed concerns about the settlement’s ability to provide practical solutions to Terraform victims.


Coinbase CLO Asks About SEC Settlement with Kwon


Paul Grewal expressed doubts about the effectiveness of the settlement on X (formerly Twitter) and criticized the SEC for the way it approached the case. He noted that the settlement only required the SEC to be treated as an unsecured creditor in Terraform’s bankruptcy case and required Kwon to surrender only $7 million of his assets.

Touting a $4.7 billion deal with Kwon and the now-bankrupt Terraform is predictably on-brand. But the deal makes the SEC an unsecured creditor in the UK and orders Kwon to turn over only the more than $7 million in assets he actually owns. That does not make sense…

— paulgrewal.eth (@iampaulgrewal) June 12, 2024

Moreover, according to Grewal, this does not go a long way towards providing adequate compensation to victims of Terraform’s fraudulent practices that have resulted in many people losing money.

As we continued the conversation, other influential figures in the crypto space shared similar views. CryptoQuant CEO Ki Young Ju stated that it was unrealistic for Terraform Labs to have such funds for the deal, raising doubts about the legitimacy of its financial activities. Ultimately, Ki’s comments offer perspective on the general skepticism in the crypto world about Terraform Labs’ transparency and ethical standards.

Terraform Labs to Pay $4.47 Billion to Cover SEC Expenses




The settlement agreement requires Terraform Labs to pay $3.58 billion in damages and a $420 million fine to the SEC. This comes after a jury ruled in April that Do Kwon and his firm defrauded investors in cryptocurrency products.

The case, presided over by U.S. District Court for the Southern District of New York Judge Jed Rakoff, reached a landmark decision by offering settlement terms.

Assuming Terraform Labs will actually pay $4.47 billion… why is this capital going to a soulless government agency rather than being used to compensate Terra‘s victims?

Is this what ‘protecting investors’ should be like? If so, I’d like to give up, thanks

— Zach Rynes | CLG (@ChainLinkGod) June 12, 2024

But the crypto community and industry leaders are concerned about how the settlement funds will be distributed and where they will end up. Zach Rynes, community lead at Chainlink, also expressed his displeasure with the settlement being paid to the SEC instead. Number of people affected by the collapse of Terra.


Consequently, this criticism can be linked to the emerging discourse regarding the need for regulatory measures to focus more on investor protection and the return of stolen funds.

Also read: Bitcoin Short-Term Investment Reaches New Highs with ETF Popularity





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Kelvin is a distinguished author specializing in crypto and finance, with a bachelor’s degree in Actuarial Science. Known for her sharp analysis and insightful content, she is fluent in English and specializes in comprehensive research and on-time delivery.





The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. Neither the author nor the publication accepts any liability for your personal financial loss.

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