SEC suggests $5.3 billion fine for Do Kwon, Terraform Labs
The SEC is calling for a New York court to impose $5.3 billion worth of fines on Terraform Labs and its co-founder Do Kwon, citing their roles in the 2022 Terra-Luna collapse. The two parties are contesting the amount of the civil penalties, with Terraform Labs arguing a maximum fine of $3.5 million and Kwon offering to pay $800,000.
Federal regulators are requesting Terraform Labs and its co-founder Do Kwon be fined $5.3 billion for defrauding investors, shortly after the two parties were found liable for a multi-billion-dollar fraud.
According to a court filing from April 19, the U.S. Securities and Exchange Commission requested Kwon and Terraform pay roughly $4.7 billion in disgorgement and prejudgment interest for their role in 2022’s Terra-Luna collapse . The SEC is also asking the court to order Terraform and Kwon to pay $420 million and $100 million, respectively, in civil penalties.
“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,” the SEC said in a filing.
Kwon and his company were found liable for misleading customers about the safety of investing in its algorithmic stablecoin Terra USD (UST) and its underlying blockchain's utility, according to a New York civil court jury's verdict. Crypto investors purchased more than $2 billion worth of UST from exchanges and other trading venues alone, court documents show.
The SEC called its proposed fines “conservative” but “reasonable,” particularly given the vast wealth Kwon reaped from Terraform's ill-fated stablecoin, according to the filing. The company and its founder are contesting the amount of the civil penalties, with Terraform Labs arguing that a maximum fine of $3.5 million would be more appropriate and Kwon offering to pay just $800,000.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
ETH breaks through $3,700
Bitcoin's market share continues to decline, now at 53.80%
Ronin Wallet v2.1.9 Brings Key Updates and Bug Fixes