According to Bloomberg, the Securities and Exchange Commission (SEC) has proposed a fine for Kwon and Terraform, which could be the largest in the crypto industry. The fine is in response to the duo making over $4 billion from unregistered sales of tokens, including LUNA and UST. The SEC's filing to the Southern District Court of New York stated that Terraform's UST, an algorithmic stablecoin supposed to be pegged to the US dollar, wiped out $40 billion in market value when it collapsed in 2022.
The SEC's proposed fine includes a $4.2 billion disgorgement penalty, $545 million in prejudgment interest, and civil penalties of $420 million and $100 million for Terraform and Kwon respectively. If approved, the total fine would surpass $4.3 billion. Lawyers for Kwon and Terraform have disputed the SEC's claims, arguing that the token sales occurred outside the US and did not violate federal securities law.
Kwon, who was arrested in Montenegro last year for attempting to travel with a fake passport, is currently awaiting extradition to either the US or his native South Korea. He faces criminal fraud charges in both countries. The SEC has also requested a permanent bar on Kwon, who owns 92% of Terraform, from serving as an officer or director and is seeking a 'sworn accounting' of his assets.