🤯 SEC Seeks $5.2B Penalties from Terraform and Do Kwon
The United States Securities and Exchange Commission (SEC) is seeking to impose substantial monetary penalties on Terraform Labs and its co-founder, Do Kwon, following a civil case verdict. In an April 19 filing in the U.S. District Court of New York in the Southern District of New York, the SEC demands that about $4.7 billion should be given back as disgorgement and prejudgment interest, plus $520 million in civil penalties. This is a total of $520 million provided by Terraform and $100 million from Kwon.
However, Terraform and Kwon had opposing views on how the penalties could be imposed. The crypto firm suggested a maximum civil penalty of $3.5 million, which was strongly opposed by Kwon, who argued for a much lower amount of $800,000. Along with the financial judgment, the SEC also recommended disqualifying Kwon from being an officer or director of a security issuer and ensuring full disclosure of banking accounts and assets. The SEC also wants to impose a “conduct-based injunction” on Terraform to avoid any repetition of this misconduct later.
🔺 Terraform, Kwon Found Liable for Investor Fraud
In its filing, the SEC emphasized the defendants’ purported lack of remorse for their actions and the potential for future violations. The commission stated, “Defendants have not shown remorse for their conduct, nor can there be any doubt that they are in the position where additional violations are not only possible but likely are already occurring.” The SEC highlighted the need for a clear message to deter similar misconduct, particularly regarding attempts to justify actions through new standards in crypto markets, contrary to federal securities laws.
The proposed remedies and civil judgment are pending approval by a judge. This development follows a jury’s verdict on April 5, which found Terraform and Kwon liable for defrauding investors concerning statements related to the offer and sale of TerraUSD (UST), Luna, and wLUNA.
