According to Bloomberg, the U.S. Securities and Exchange Commission (SEC) claimed in its lawsuit against Terraform and Kwon that the company's collapse in 2022 caused investors to lose $40 billion in assets, shaking the cryptocurrency world. However, Terraform's lawyers argued in Wednesday's filing that the company's "offering and sales of tokens were conducted almost entirely outside the United States" and that the SEC did not provide any evidence that Terraform and Kwon's "limited activities in the United States directly caused any losses, let alone the billions of dollars in restitution sought by the SEC."
Terraform and Kwon were convicted of fraud on April 5 after a two-week trial. The SEC subsequently urged the judge to impose a fine that would be the largest ever imposed on the crypto industry as it comes under increased scrutiny from U.S. regulators. In its filing last week, the SEC urged the court to send a “clear message that this kind of blatant misconduct” would not be tolerated.
The SEC accused Terraform and Kwon of reaping more than $4 billion in “illegal proceeds” from unregistered token sales, including LUNA and UST. Terraform’s UST, an algorithmic stablecoin that was supposed to be pegged to the price of the U.S. dollar, lost $40 billion in market value when it collapsed in 2022.
