By Terraform Labs and its founder, Do Kwon, are facing hefty financial trouble after the United States Securities and Exchange Commission (SEC) filed a motion on April 19, demanding $5.3 billion in fines following the commission’s win in its civil Terra-Luna case against the crypto mogul.
Terraform Labs And Founder Facing Billions In Penalties
The SEC’s filing in the U.S. District for the Southern District of New York seeks Kwon and Terraform Labs to pay nearly $4.7 billion in disgorgement and prejudgment interest following the Terra-Luna case.
Kwon will also have to forfeit $100 million of his own funds in civil penalties, while Terraform Labs will have to pay $420 million, respectively.
#SEC seeks $5.3 billion against TerraformLabs & DoKwon after fraud verdict:
– Jury finds Terraform & Kwon liable for deceptive practices.
– SEC requests $4.7B in disgorgement and interest, plus $520M in civil penalties.
– In response, Terraform proposes a $3.5M penalty, Kwon… pic.twitter.com/ZDw8w7Vw3C
— @TheLordofEntry (@thelordofentry) April 23, 2024
On top of financial fees, the SEC has asked the court to bar Kwon from operating as a securities officer and director of any securities issuer, as well as to issue an injunction against both the crypto founder and Terraform Labs.
The Landmark Civil Terra-Luna Case Against Do Kwon
New’s of the SEC’s motion follows a substantial two-week long trial that found Kwon liable for fraud after the collapse of his algorithmic stablecoin, TerraUSD, and its sister token, Luna, prompted a $40 billion crypto market crash.
Kwon, however, was not present at the landmark civil trial. Instead, he was stuck in Montenegro after the country confiscated his passport following his release from prison for using fake travel documents to escape legal consequences related to the crypto crash.
“For all of crypto’s promises, the lack of registration and compliance have very real consequences for real people,” said the SEC’s Director of Enforcement, Gurbir S. Grewal. “As the hard work of our team shows, we will continue to use the tools at our disposal to protect the investing public, but it is high time for the crypto markets to come into compliance.”
The United States and Kwon’s native South Korea are currently vying for his extradition amidst a lengthy legal battle for the Terraform Labs’ founder.
According to experts, Kwon’s legal team is pushing for him to be sent back to his home country in hopes of receiving a lighter sentence.
SEC In Hot Water With Crypto Community
Meanwhile, the SEC is facing its own challenges in regulating digital assets, with many in the crypto community displeased with the federal agency’s regulation-by-enforcement approach.
Earlier this month, SEC officials Michael Welsh and Joseph Watkins resigned after facing harsh criticism and legal repercussions over their handling of the DEBT Box case.
Similarly, SEC Commissioner Hester Pierce has publicly criticized her agency, claiming the commission’s regulatory tactics were “scaring people off.”
It’s unclear when and how Kwon will respond to the SEC’s billion-dollar demands.
The post Do Kwon And Terraform Labs Hit With $5.3 Billion Penalty From SEC in Terra-Luna Case appeared first on Cryptonews.
