The United States Securities and Exchange Commission (SEC), has made a significant move in its lawsuit against Terraform Labs and its founder Do Kwon. After a jury found Terraform Labs and Do Kwon guilty of fraud in cases involving the SEC, the commission filed a petition demanding $5.3 billion in compensation and penalties.
SEC Submits Court Petition
In its application to the Southern District of New York Federal Court on April 19, the amount requested from Kwon and Terraform is quite notable. The Commission is seeking penalties totaling $520 million, with $420 million from Terraform and $100 million from Kwon. This penalty includes approximately $4.7 billion in unjust enrichment and interest.
Both parties have simultaneously submitted summaries regarding potential resolutions in the legal case. However, the SEC’s request significantly differs from the criminal proposals submitted by Terraform and Kwon. The crypto firm Terraform proposes a maximum penalty of $3.5 million, while Do Kwon has proposed just $800,000.
The SEC’s filing emphasizes that the defendants have shown no remorse and there is a clear statement that further violations have likely occurred. It also highlights the need for the court to take a firm stance against such abuses and violations of securities laws.
Fraud Findings Were Reported
A previous jury decision found that Terraform and Kwon had defrauded investors with the offering and sale of TerraUSD (UST), Luna, and wLUNA. However, a spokesperson for Terraform stated that the company is carefully considering its options and next steps.
The SEC case is progressing despite Kwon dealing with court proceedings in Montenegro. Kwon was arrested in March 2023 for attempting to leave the country using fake travel documents. Although he has since been released, it remains unclear whether he will be extradited to the US or South Korea.
The outcome of the SEC’s actions against Terraform Labs and Do Kwon and the impact of this process on the crypto industry are subjects of interest. However, looking at the requested penalty, the figure is higher than the $4.3 billion agreed upon by Binance. The crucial issue before the penalty is imposed is whether Do Kwon will be extradited to America. If Kwon is not extradited and the penalty is imposed, the matter could move to a different phase.
