"Terraform Labs and Do Kwon's Lawyers Contest SEC's Penalty

Lawyers representing Terraform Labs and its co-founder Do Kwon are disputing the fines proposed by the US Securities and Exchange Commission (SEC), arguing for a significantly reduced penalty of around $1 million instead of the proposed $5.3 billion. The SEC's proposal includes $4.7 billion in damages and pre-judgment interest, plus a $420 million fine for Terraform and $100 million for Kwon. However, the defendants' legal team believes these figures are excessive.

In a recent court filing, Terraform and Kwon's lawyers argued for a substantially lower sentence, stating that the court should not grant injunctive relief or damages and should fine Terraform Labs no more than $1 million. This development follows the SEC's charges against Terraform and Kwon in February 2023 regarding issues with the algorithmic stablecoin Terra USD (UST), which suffered a dramatic collapse in May 2022, resulting in losses exceeding $50 billion. A jury has since found both Terraform and Kwon liable for civil fraud, and Judge Jed Rakoff granted summary judgment to the SEC, supporting allegations that Terraform and Kwon offered and sold unregistered securities. Terraform is currently considering its options and next steps in response to the legal proceedings."