The SEC pursues a staggering $5.2 billion in penalties from Terraform Labs and its co-founder, Do Kwon, alleging crypto fraud.
The United States Securities and Exchange Commission (SEC) is making significant moves against Terraform Labs and its co-founder, Do Kwon, following a civil case verdict. In a recent filing, the SEC demands a hefty sum of about $4.7 billion as disgorgement and prejudgment interest, coupled with $520 million in civil penalties, distributed between Terraform and Kwon.
Differing Views on Proposed Fines: Terraform’s Suggested Penalty vs. Kwon’s Opposition
Terraform Labs proposed a maximum civil penalty of $3.5 million, contrasting sharply with Kwon’s plea for a significantly lower amount of $800,000. The SEC, however, stands firm in its insistence on a $5.2 billion penalty. Alongside the financial penalties, the SEC also recommends disqualifying Kwon from holding officer or director positions in security issuers and calls for full disclosure of banking accounts and assets.
Terraform and Kwon Liable for Investor Fraud: SEC’s Verdict and Implications
The SEC’s filing underscores the defendants’ purported lack of remorse and potential for future violations. It emphasizes the necessity of sending a clear message to deter similar misconduct in the future. This development follows a jury’s verdict on April 5, which found Terraform and Kwon liable for defrauding investors in relation to TerraUSD (UST), Luna, and wLUNA offerings. The proposed remedies and civil judgment are pending approval by a judge, while Terraform Labs considers its options moving forward.
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