Terraform Labs has agreed to pay a record $4.47 billion fine to the Securities and Exchange Commission (SEC) to settle a lawsuit over fraudulent activities related to the now-defunct Terra blockchain. The settlement includes $3.6 billion in disgorgement, $466 million in prejudgment interest, and a $420 million civil penalty.

The SEC had accused Terraform and its co-founder, Do Kwon, of securities fraud in 2023, claiming that the company's unstable blockchain design led to a $44 billion meltdown of its LUNA and UST tokens. Kwon has agreed to pay nearly all penalties requested by the SEC, including $204 million in monetary relief, which will go to the Terraform Labs bankruptcy estate to help affected investors.

This settlement, if approved, would be the largest in a crypto fraud case, surpassing Binance's $4.3 billion settlement with the Justice Department last November. However, doubts remain over whether Terraform or Kwon have the funds to pay the charges. Despite this, the settlement marks a significant step towards accountability in the DeFi sector.