SEC Seeks Billions in Penalties Against Terraform Labs and Co-Founder Do Kwon Following Lawsuit Verdict
Summary:
The US Securities and Exchange Commission (SEC) has requested a court to order Terraform Labs and its co-founder, Do Kwon, to pay roughly $4.7 billion in fines and interest, along with $520 million in civil penalties. The move follows a civil lawsuit verdict. The SEC also suggested barring Kwon from serving as an officer or director of a security issuer. The proposed penalties are yet to be determined by a judge. Terraform and Kwon were found guilty in a trial for misleading investors about the offer and sale of several digital currencies.
A U.S. court has heard a motion from the Securities and Exchange Commission (SEC) to impose billions in fines and damages on Terraform Labs and its co-founder, Do Kwon, following a civil lawsuit verdict. The SEC filed the request on April 19 in the Southern District of New York, calling for Kwon and Terraform to pay around $4.7 billion in disgorgement and interest after the lawsuit decision, along with $520 million in civil fines. Terraform is responsible for $420 million of this, with Kwon liable for the remaining $100 million. The SEC and the defendants have submitted proposed remedies for the case, with Terraform suggesting a maximum penalty of $3.5 million and Kwon suggesting a maximum of $800,000.
Specifically, the SEC is requesting that Kwon be prevented from acting as an officer or director of a security issuer and be ordered to disclose complete details of his assets and accounts. If granted, Terraform would be subjected to a "conduct-based injunction” to stop it from repeating its previous fraudulent behavior. The proposed civil penalties and remedies have yet to be decided by a judge.
In the SEC's filing, the commission stated, “The defendants aren’t showing any remorse for their fraudulent conduct. Their possibility of subsequent violation is evident and could already be ongoing. We, as a court, must send a strong message that such reckless wrongdoing, coupled with the defendants’ flagrant attempt to rationalize their actions through new customs and standards in the digital currency markets against federal securities laws, cannot be accepted.”
In a trial on April 5, Terraform and Kwon were found guilty of misleading investors about TerraUSD (UST), Luna (LUNA), and wLUNA's offering and sale. A spokesperson from Terraform at the time expressed that the company was cautiously assessing its future actions. Terraform has yet to comment on the SEC’s April 19 filing.
At Terraform's trial, Kwon was absent as he is in Montenegro dealing with legal battles. He was arrested there in March 2023 for using forged travel documents to exit the country. Despite his subsequent release and permission to travel around Montenegro, questions surrounding Kwon’s possible extradition to the U.S. or South Korea remained unresolved. Legal proceedings are expected in both countries.
Published At
4/23/2024 12:08:57 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.