As an analyst with a background in financial regulation and securities law, I find the Terraform and Do Kwon case to be a complex and intriguing one. The proposed penalty of $5.3 billion by the US SEC against Terraform Labs and its co-founder is significant, especially considering that lawyers for the company are seeking a reduction of over 98%.
As a researcher, I’ve come across an intriguing development regarding the proposed penalty for Do Kwon, co-founder of Terraform Labs, by the US Securities and Exchange Commission (SEC). The SEC has suggested a hefty fine of $5.3 billion. However, legal representatives for Terraform Labs have put forth an alternative perspective, arguing that a penalty of only $1 million would be more fitting. Essentially, they’re advocating for a reduction of over 98% from the proposed penalty.
Last week, the US Securities and Exchange Commission (SEC) announced that Terraform and Do Kwon are required to pay a combined sum of approximately $5.2 billion. This amount includes around $4.7 billion in disgorgement charges and prejudgment interest, as well as a civil penalty of $520 million. However, in their legal submission, Terraform’s lawyers argued for a significantly lower penalty. The filing indicated:
In order to seek the return of funds from Luna Foundation Guard (LFG) by the SEC, it became necessary for the SEC to include LFG as a defendant or a party seeking relief in the lawsuit. However, the SEC failed to do so, thus:
“In my assessment, the court should deny any request for injunctive relief or disgorgement, and levy a maximum civil penalty of $1 million against TFL.”
The Terraform and Do Kwon Case
As a researcher investigating recent developments in the tech industry, I came across some intriguing news regarding legal disputes involving Terraform and Ripple. In early February 2023, the Securities and Exchange Commission (SEC) brought charges against both Terraform and its co-founder Kwon, focusing on alleged violations related to their algorithmic stablecoin, Terra USD (UST).
After a two-week long hearing with the Securities and Exchange Commission (SEC), my team at Terraform and I, including Kwon, were found to have misled investors according to the jury’s decision on April 5. Although we are currently dealing with this verdict, we are diligently considering our available options and making preparations for our future actions.
At the court hearing and subsequent judgment, Kwon’s attendance was conspicuously lacking due to travel limitations that kept him in Montenegro. As a co-founder of Terraform, Kwon had been apprehended in Montenegro back in March 2023 under suspicion of employing forged travel documents. Currently, Montenegrin officials are weighing the extradition demands from both the United States and South Korea.
In 2022, Terraform Labs’ $40 billion crash resulted in a major market slump that caused the bankruptcy of various crypto companies such as BlockFi, Celcius, FTX, and others. This year, the platform initiated Chapter 11 bankruptcy proceedings.
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2024-04-30 10:24