The US Securities and Exchange Commission (SEC) is seeking a $5.3 billion judgment against Terraform Labs and its CEO and co-founder, Do Kwon. This is in response to a motion for settlement that was filed at $3.5 million, with Kwon offering an additional $800,000.
The SEC has filed a motion in the US District Court for the Southern District of New York outlining the civil penalties and disgorgement it wants imposed on Terraform Labs and Kwon. This comes after a recent fraud verdict that resulted in $4.7 billion being disgorged and prejudgment interest.
In addition to the $520 million in civil penalties that the SEC wants imposed, they are also seeking to ban Kwon from taking on any executive roles within the market and require him to comply with all financial disclosure requirements.
The proposed penalties and remedies are awaiting judicial approval, which will be the next step after the jury’s verdict on April 5, 2024. The verdict found Kwon and the company liable for defrauding investors through false statements about the crypto tokens TerraUSD (UST), Luna (LUNA), and wLUNA.
The collapse of LUNA and UST in 2022 had a major impact on the crypto market. Kwon was arrested in May 2023 in Montenegro and is currently in custody pending potential extradition to the US or South Korea.
It is important to note that the proposed penalties and remedies suggested by the SEC differ greatly from those proposed by Terraform Labs and Kwon. Their brief proposed civil remedies of $3.5 million and Kwon’s offer of only $800,000.
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