Key Highlights;
- SEC requests $5.3 billion in disgorgement and penalties from Terraform Labs and Do Kwon after fraud verdict.
- SEC seeks to bar Kwon from corporate leadership and demands detailed asset disclosures.
Yello ParadiseSquad! The U.S. Securities and Exchange Commission (SEC) has made a striking move by filing a motion for a whopping $5.3 billion in penalties against Terraform Labs and its founder, Do Kwon. This request follows a jury’s decision which found the defendants guilty of fraud in a high-stakes legal battle.
Details of the Financial Blow
In this jaw-dropping development, the SEC is not only seeking about $4.7 billion in disgorgement combined with prejudgment interest but also an additional $520 million in civil penalties. These figures break down to $420 million expected from Terraform and a $100 million hit directly to Kwon. This legal action was detailed in documents filed on April 19 at the U.S. District Court for the Southern District of New York.
Beyond Monetary Penalties
Aside from the financial penalties, the SEC’s proposal includes barring Do Kwon from serving as an officer or director in any securities-related company. They also demand a comprehensive disclosure of Kwon’s personal financial details. Furthermore, the SEC suggests a conduct-based injunction on Terraform, aiming to prevent future fraudulent activities akin to those that triggered the massive lawsuit.
A Clear Message from the SEC
The SEC’s filing expressed a strong stance against the defendants’ actions and attempted justifications, emphasizing the need for a clear message against such misconduct. The court has yet to make a decision on these proposed penalties and restrictions.
Backstory and Ongoing Legal Drama
The verdict on April 5 marked a significant turn in the case, finding Terraform and Kwon liable for misleading investors about their crypto products, including TerraUSD, Luna, and wLUNA. Meanwhile, Kwon is entangled in additional legal issues abroad, dealing with court proceedings in Montenegro following his arrest over false travel documents in March 2023.
As the legal narratives unfold, the crypto and trading communities are closely monitoring the implications of this landmark SEC action, which could set precedents for how regulatory bodies handle major fraud cases within the rapidly evolving digital currency space.
