United

April

The United States Securities and Exchange Commission (SEC) has filed a motion requesting billions of dollars in disgorgement and civil penalties against Terraform Labs and its co-founder <a href="https://cointelegraph.com/top-people-in-crypto-and-blockchain-2023/do-kwon" rel="noopener noreferrer nofollow">Do Kwon</a> following a verdict in its civil case.
In an April 19 filing in U.S. District Court for the Southern District of New York, the SEC <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysd.594150/gov.uscourts.nysd.594150.231.0.pdf" target="_blank" rel="noopener noreferrer nofollow">requested</a> Kwon and Terraform pay roughly $4.7 billion in disgorgement and prejudgment interest after the civil case ruling, as well as a combined $520 million in civil penalties — $420 million from Terraform and $100 million from Kwon. The commission, Terraform and Kwon filed their briefs for potential remedies in the civil case simultaneously, with the crypto firm <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysd.594150/gov.uscourts.nysd.594150.235.0.pdf" target="_blank" rel="noopener noreferrer nofollow">suggesting</a> a maximum civil penalty of $3.5 million and Kwon <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysd.594150/gov.uscourts.nysd.594150.237.0.pdf" target="_blank" rel="noopener noreferrer nofollow">proposing</a> only $800,000.
<figure><img src="https://s3.cointelegraph.com/uploads/2024-04/809d15f8-00b6-474c-b0d5-7ea3aaac29f5.png">
 <figcaption style="text-align: center;">Source: <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysd.594150/gov.uscourts.nysd.594150.231.0.pdf" target="_blank" rel="noopener noreferrer nofollow">Courtlistener</a>
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In addition to the monetary judgment, the SEC proposed barring Kwon from serving as an officer or director of a securities issuer and providing complete details of his accounts and assets. If approved, Terraform would also have a “conduct-based injunction” imposed on the firm to prevent “engaging in essentially the same behavior that led to the massive fraud.” The proposed remedies and civil judgment have yet to be ruled on by a judge.&nbsp;
“Defendants have not shown remorse for their conduct, nor can there be any doubt that they are in position where additional violations are not only possible but likely are already occurring,” said the SEC filing. “The Court should send an unequivocal message that this sort of brazen misconduct, and Defendants’ misbegotten attempt to excuse their behavior by crafting new rules and standards of behavior for crypto markets in contravention of the federal securities laws [...] will not be tolerated.”
On April 5, a jury <a href="https://cointelegraph.com/news/terraform-labs-do-kwon-liable-fraud-sec" rel="noopener noreferrer nofollow">found Terraform and Kwon</a> liable for defrauding investors regarding statements over the offer and sale of TerraUSD (UST), Luna (<a href="https://cointelegraph.com/terra-price-index" rel="noopener noreferrer nofollow">LUNA</a>) and wLUNA. A Terraform spokesperson said at the time that the firm was “carefully weighing [its] options and next steps.” Cointelegraph reached out to Terraform regarding the April 19 filing but did not receive a response at the time of publication.
Related: <a href="https://cointelegraph.com/news/terraform-labs-lies-sec-trial" rel="noopener noreferrer nofollow">Terraform Labs was ‘built on lies’ — SEC at trial</a>
The SEC trial went forward without the presence of Kwon, who is currently embroiled in court proceedings in Montenegro. The Terraform co-founder was arrested in March 2023 for using falsified travel documents while attempting to leave the country.
Though later released and allowed to travel within Montenegro, the <a href="https://cointelegraph.com/news/montenegro-do-kwon-extradition-court" rel="noopener noreferrer nofollow">question of Kwon’s extradition</a> to either the U.S. or South Korea remained unanswered at the time of publication. He faces potential criminal charges in both countries.
Magazine: <a href="https://cointelegraph.com/magazine/real-risks-ethena-stablecoin-model-not-ones-you-think/" rel="noopener noreferrer nofollow">The real risks to Ethena’s stablecoin model (are not the ones you think)</a>

SEC seeks $5.3B judgment against Terraform Labs and Do Kwon

Cointelegraph

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