Good morning. Terraform Labs, the company of fallen crypto tycoon Do Kwon, agreed Wednesday to one of the largest penalties ever to settle a civil securities-fraud lawsuit, consenting to pay the Securities and Exchange Commission just under $4.5 billion and wind down its operations.

Kwon himself agreed to pay $204 million as part of the deal. The former chief executive of Terraform Labs was arrested last year in the Balkan country of Montenegro, where he remains in immigration detention. Both the U.S. and South Korea are seeking his extradition.

• Pending approval: A court still needs to approve the deal between Terraform Labs and the SEC. If approved, the settlement would be one of the biggest achievements to date by authorities around the world seeking accountability over the ruinous collapse of Kwon’s TerraUSD and Luna cryptocurrencies in May 2022. 
   
• The background: The 2022 crash erased some $40 billion in value from the digital-currency markets and wiped out the savings of thousands of investors worldwide. Kwon had heavily hyped TerraUSD and Luna before the crash. He mocked his critics on social media as “idiots” and told one: “I don’t debate the poor on Twitter.”
   
• Bankruptcy proceedings: Still, the SEC may only end up receiving a fraction, if any, of the penalty. Terraform Labs is in bankruptcy proceedings and says it has less than half a billion dollars in assets. Even if the Terraform bankruptcy estate found the money to pay the SEC, the agency would need to wait in line behind other creditors. The penalty would count as a general unsecured claim in Terraform’s bankruptcy case, meaning that higher-priority creditors, such as lenders, would get paid before any money went to the SEC.

Nike loses to Puma in EU trademark dispute.

Nike suffered a setback in its bid to trademark the capitalized version of the word “footware” for tech-related products after a European Union court upheld a complaint from German rival Puma.

The General Court of the European Union, the bloc’s second-highest, effectively dismissed Nike’s trademark application and ordered the world’s biggest shoemaker to pay legal costs in Puma’s favor. Nike may appeal the decision from the General Court to the EU’s highest court, the European Court of Justice. 

Biden administration imposes new sanctions, export controls ahead of G7 meeting.

The U.S. Treasury Department imposed a new set of economic restrictions on Russia ahead of a meeting of the Group of Seven nations this week, including an action that increases pressure on foreign banks to steer clear of the country’s economy.

The new sanctions target more than 300 entities whose products and services officials said have enabled Russia to sustain its war against Ukraine. They also expand so-called secondary sanctions on foreign financial institutions announced by the Biden administration last year.

An executive order in December allowed the Treasury to impose sanctions on foreign banks that do business with parties linked to Russia’s military-industrial base. The department on Wednesday said it was broadening the definition of Russia’s military-industrial base and would now begin imposing sanctions on foreign banks that do business with any entities the U.S. has sanctioned as part of its response to the Ukraine invasion.

The move reflects Treasury’s assessment that Russia has re-oriented its entire economy around supporting its war in Ukraine, the department said.

—Dylan Tokar

• Fisker has issued two voluntary recalls of its Ocean SUVs in North America and Europe over software-related problems, adding to the carmaker’s mounting woes.
   
• Federal regulators said UnitedHealth Group will be allowed to notify people whose data was exposed during a ransomware attack on its Change Healthcare unit in February. That means UnitedHealth can notify victims of the many U.S. hospitals and healthcare providers whose patients were affected by the hack, sparing providers from time-consuming and expensive work.
   
• The Financial Accounting Standards Board wants to set requirements on how companies account for environmental credits such as renewable energy certificates and carbon offsets, as more state governments set up mandatory programs in the U.S.
   
• The Oklahoma Supreme Court on Wednesday dismissed a lawsuit brought by survivors of the 1921 Tulsa Race Massacre, who sought reparations for the attack.
   
• The Public Company Accounting Oversight Board expanded liability for individuals involved in firm violations and proposed tighter rules around one of the ways auditors gather evidence to detect financial misstatements.
   
• A bitter battle over a congressional seat in South Carolina has shone a spotlight on a new housing subsidy for lawmakers that can amount to tens of thousands of dollars a year.

Biden’s alliance-building tested by Trump at home and abroad.

President Biden has been a coalition-builder on the world stage. But as he seeks re-election, he is facing the re-emergence of the far right—and the specter of the strongman—both at home and abroad.

Biden’s ability to hold together a Western alliance, central to the defense of Ukraine in its war against Russia, will be at the forefront when he arrives Wednesday in southern Italy’s Puglia region for the Group of Seven industrialized nations summit.

Hamas hardens stance on U.S.-backed cease-fire proposal.

Hamas has toughened its position on a Gaza cease-fire proposal with Israel that has faced intransigence from both sides despite heavy U.S. lobbying, including by President Biden, to end an eight-month war that has destabilized the Middle East.

Meanwhile, violence flared on Israel’s northern border with Lebanon, as the Iranian-backed military group Hezbollah staged its biggest attack on Israel since the early days of the war following months of lower-intensity conflict.

• How Ambitious Plans for a Floating Aid Pier off Gaza Fell Apart'

• Federal Reserve officials penciled in just one interest-rate cut for this year, indicating most are in no hurry to lower rates, even after a widely watched report Wednesday showed inflation improved last month.
   
• The U.K.’s economic recovery sputtered to a halt at the start of the second quarter, underlining the scale of the task facing the next government in lifting the country out of a long period of stagnation.
   
• France’s deteriorating finances are at risk if voters choose populists who pledge even more government spending.

• The House voted Wednesday to hold Attorney General Merrick Garland in contempt for refusing to release audiotapes of President Biden.
   
• After a turbulent few years, consulting giant McKinsey's global managing partner Bob Sternfels talks about revamping the company’s structure and employee development; ‘Not everyone gets an A.'
   
• Artificial intelligence is pushing chief information officers closer to the corner office than ever before.
   
• Canadian officials are delivering a unified message for U.S. leaders: The country can help drive America’s economy higher as long as Canada maintains duty-free access to the world’s largest economy after November’s election.

Follow us on X at @WSJRisk. Follow Risk & Compliance editor David Smagalla @DSmagalla_DJ and reporters Mengqi Sun @_MengqiSun, Dylan Tokar @dgtokar and Richard Vanderford @VanderfordRich.

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