The U.S. Securities and Exchange Commission (SEC) has demanded the return of approximately $4.7 billion, as well as $520 million in civil penalties. Furthermore, the regulatory agency is considering imposing a “conduct-based injunction” on Terraform Labs and its co-founder, Do Kwon. This comes after a recent civil case ruling, wherein Terraform and Kwon face the possibility of substantial financial penalties from the SEC.
A filing made on April 19 in the U.S. District Court of New York, specifically the Southern District of New York, reveals the SEC’s request for the return of funds amounting to about $4.7 billion in disgorgement and prejudgment interest, accompanied by $520 million in civil penalties.
However, Terraform and Kwon hold differing opinions on how best to implement the fines. Kwon strongly disagrees with the crypto firm’s proposed maximum civil penalty of $3.5 million and advocates for a significantly smaller amount of $800,000.
In addition to the financial judgment, the SEC has proposed further restrictions, including Kwon’s removal from his position as a director or officer of a securities issuer, as well as the public disclosure of all assets and bank accounts. To prevent Terraform from engaging in similar misconduct in the future, the SEC is contemplating the imposition of a “conduct-based injunction” on the company.
According to the SEC’s statement, the defendants have shown no remorse for their actions and may potentially commit similar offenses in the future. Before the civil judgment and specified remedies can take effect, they must be approved by a court. Recently, a jury found Terraform and Kwon guilty of investment fraud related to misrepresentations concerning the offer and sale of TerraUSD (UST), Luna, and wLUNA on April 5.
Terraform is currently “carefully considering its options and next steps,” as stated by a company representative in a previous announcement.
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