SEC faces Aug. 20 deadline to unlock $123 million recovery fund for Terra investors

The US Securities and Exchange Commission (SEC) faces an Aug. 20 deadline to submit a plan for distributing a $123.1 million fund paid by Jump Crypto subsidiary Tai Mo Shan to investors harmed by Terra's 2022 collapse.

The proposal is expected to determine who qualifies for compensation, how losses will be calculated, whether investors must submit claims, and how eventual payments will be made.

An SEC order issued in February gave staff until Aug. 20 to submit the proposed distribution plan after granting additional time to develop the methodology and coordinate with recoveries stemming from separate Terraform Labs litigation.

The deadline does not mean investors are due to receive money Thursday. Instead, any payout would depend on the distribution framework and subsequent steps required by the regulator.

Tai Mo Shan has already paid the full $123.1 million ordered by the SEC, including $73.45 million in disgorgement, $12.92 million in prejudgment interest and a $36.73 million civil penalty.

The money, plus accrued interest, is being held in a Fair Fund for eventual distribution to eligible investors.

The SEC created the fund after finding that Tai Mo Shan negligently misled investors during TerraUSD's May 2022 depeg and acted as a statutory underwriter for certain Terra LUNA sales. Tai Mo Shan settled without admitting or denying the findings.