SEC Extends Deadline for TerraUSD Fund Distribution Plan to 2027

The Securities and Exchange Commission has until Oct. 19, 2027, to decide whether to approve a proposed distribution plan for a $123.1 million TerraUSD (UST) fund, leaving potential investor payments unresolved.

The Fair Fund stems from a separate proceeding against Tai Mo Shan Limited, a wholly owned subsidiary of Jump Crypto Holdings LLC. Tai Mo Shan paid $123,095,287 in disgorgement, prejudgment interest and civil penalties. The fund holds that payment plus accrued interest; taxes, fees and expenses would be deducted from the amount available for distribution.

In a 2024 proceeding, the SEC found Tai Mo Shan negligently misled the public about UST’s peg during a May 2021 depeg. The SEC also found that the company acted as a statutory underwriter in certain LUNA sales.

For loss calculations, the proposed plan includes UST acquired between May 23, 2021, and May 8, 2022. It does not set individual payment amounts or a distribution date. The extension applies to the SEC’s decision on the plan; it does not authorize payments. The stated purchase dates define which losses would be calculated, while each investor’s payment remains unspecified.

The agency received eight comments by the deadline and considered one late submission. Enforcement staff requested more time to recommend a decision on the comments and proposed plan.

The SEC filed a separate case against Terraform Labs PTE Ltd. in February 2023, alleging fraud and unregistered offers and sales of crypto asset securities, including UST. A jury found the company liable for securities fraud in April 2024, and the parties later consented to a final judgment.

A June 12, 2024, final judgment set Terraform’s monetary remedies at $4,473,828,306, consisting of $3,586,875,883 in disgorgement, $466,952,423 in prejudgment interest and a $420 million civil penalty. Those remedies are to be handled through Terraform’s bankruptcy case, which routes recovery to harmed investors and creditors. The SEC receives no payment through that route unless those groups are paid in full.

The two processes use different routes: the proposed Tai Mo Shan plan covers a defined purchase window, while Terraform’s remedies proceed through bankruptcy. The May 2022 collapse erased $40 billion in market value nearly overnight.

The SEC’s decision deadline is Oct. 19, 2027.