Following a serious fraud ruling against Terraform Labs and its CEO Do Kwon, all eyes are on the upcoming May 22 hearing. This is where the consequences of the verdict will be hashed out in court.
In response, Terraform’s legal team advocates for a significantly lower penalty of just $1 million. On April 29, Judge Jed Rakoff ordered the SEC, Kwon, and Terraform to appear in court on May 22. They’ll discuss suggested remedies after the jury verdict. The ruling allows changes to previous motions for penalties.
Here’s what’s next.
Let’s Talk Money
At the core of the issue are proposed solutions, with figures ranging from millions to billions. It’s a financial saga showing just how big the stakes are.
According to court documents, the SEC is seeking disgorgement and prejudgment interest totaling a staggering $4.7 billion, plus $520 million in civil penalties. On the other hand, Terraform is suggesting a modest $1 million civil penalty, without disgorgement.
Terra’s Systematic Deception
However, according to reports, the SEC has enough proof to firmly persuade the court that Terraform Labs lied to investors about the stability of its cryptocurrency coin and refused to acknowledge that other companies were working harder to keep the cryptocurrency market alive. In early April, a Manhattan jury sided with the SEC, agreeing that Terraform Labs misled investors about its coins under Kwon’s plan.
Now that the case is in the remedies stage, both parties have been granted an extension until May 6 and May 1, respectively, to submit supplementary filings supporting their proposals.
Double Trouble for Terra!
Adding to everything else, the upcoming meeting is clouded by questions about Kwon’s possible attendance. Kwon is still in Montenegro, and extradition requests from the US and South Korea are being reviewed. He can’t go to the trial in person because he was arrested there in 2023 for using fake travel papers. Because of this, it is still unclear whether he will be in court on May 22.
Meanwhile, Terraform’s financial troubles are mounting, worsened by ongoing bankruptcy proceedings. With assets and liabilities ranging from $100 million to $500 million, the company is in a serious financial bind.
Beyond the courtroom drama lies a bigger story. The upcoming hearing will not only decide the fate of Terraform Labs, Kwon, and the SEC but will also influence investor confidence in cryptocurrency. It’s a critical moment that will shape the future of digital finance.
