18 May, 2024
SEC Fines $5.2B in Penalties on Terraform Labs and Co-Founder Do Kwon
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SEC Fines $5.2B in Penalties on Terraform Labs and Co-Founder Do Kwon

Blockchain News
  • The SEC is requesting the return of about $4.7B, along with $520 million in civil penalties.
  • The regulatory agency is considering imposing a “conduct-based injunction” on the company.

In light of a recent civil case ruling, Terraform Labs and its co-founder, Do Kwon, are facing the prospect of heavy financial penalties from the U.S SEC.

A filing made on April 19 in the U.S. District Court of New York in the Southern District of New York states that the SEC is requesting the return of about $4.7 billion in the form of disgorgement and prejudgment interest, along with $520 million in civil penalties.

On the other hand, Terraform and Kwon disagreed on the best way to implement the fines. Kwon vehemently disagreed with the crypto firm’s proposed $3.5 million maximum civil penalty and pushed for a far lesser sum of $800,000.

Additional Restrictions

In addition to the pecuniary judgment, the SEC also suggested that Kwon be removed from his position as a director or officer of a securities issuer and that all assets and bank accounts be made public. In order to prevent Terraform from engaging in similar wrongdoing in the future, the SEC is considering imposing a “conduct-based injunction” on the company.

According to the SEC’s statement, the defendants showed no regret for their conduct and may commit similar crimes in the future. A court must first approve the civil judgment and specified remedies. In a recent development, a jury convicted Terraform and Kwon guilty of investment fraud in relation to representations made about the offer and sale of TerraUSD (UST), Luna, and wLUNA on April 5. Terraform was “carefully weighing [its] options and next steps,” according to a prior statement from a company representative.

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