The SEC is up against a Thursday deadline to file its plan for handing out a $123.1 million fund to investors hurt by Terra's 2022 collapse. The money comes from Tai Mo Shan, a Jump Crypto subsidiary that settled with the regulator earlier this year. The plan will decide who gets paid, how losses are calculated, and how claims get processed.
Where the money comes from
Tai Mo Shan has already paid the full $123.1 million. That breaks down to $73.45 million in disgorgement, $12.92 million in prejudgment interest, and $36.73 million in civil penalties. The cash, plus accrued interest, is sitting in a Fair Fund the SEC runs. The company settled without admitting or denying the findings, which centered on claims that it negligently misled investors during the TerraUSD depeg in May 2022 and acted as a statutory underwriter for certain LUNA sales.
What the plan has to answer
The SEC's February order gave staff until Aug. 20 to submit the distribution framework. That's a hard deadline, but it isn't the last step. The plan has to settle several questions: which investors qualify, how to measure losses, whether people must file claims, and how payments actually reach victims. The regulator asked for extra time to build out methodology and coordinate with the Terraform Labs litigation.
The answers matter because the pool is fixed. Every dollar that goes to one investor can't go to another, so the methodology for calculating losses will effectively decide who recovers what.
The bankruptcy wrinkle
Distribution gets messy because Terraform Labs is still working through its own bankruptcy. A separate recovery process is running in parallel, and the SEC has to figure out how the two tracks interact. A claim filed in the Terraform process won't automatically make someone eligible for the Tai Mo Shan fund. That's a real question the plan has to resolve — otherwise investors could trip up filing in the wrong place or double-claiming.
The SEC hasn't said whether payments from one track will offset the other, or whether investors can collect from both. Those are exactly the kinds of details the plan is expected to address.
What Thursday actually means
Thursday's deadline doesn't put money in anyone's pocket. It just forces the SEC to file a proposed framework. Payments depend on the plan being accepted and whatever steps follow. Still, the filing should be the first detailed look at how the SEC intends to unwind this — and how close the $123.1 million actually is to reaching the people it was meant for.
The plan is expected to land Thursday. After that, the SEC has to approve it, sort out the Terraform interaction, and set a timeline for actual payouts. That process could take months.
