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Regulators in the United States are seeking $5.3 billion in fines from Terraform Labs and its co-founder, Do Kwon, following a verdict in its civil case.
According to an April 19 filing with the U.S. District Court for the Southern District of New York, the Securities and Exchange Commission (SEC) has asked Kwon and Terraform Labs to pay $4.7 billion in disgorgement and prejudgment interest.
“Defendants have not shown remorse for their conduct, nor can there be any doubt that they are in position where additional violations are not only possible but likely are already occurring,” the filing said.
On top of the $4.7 billion penalty, the commission is also seeking $420 million from Terraform and $100 from Kwon as combined civil penalties. According to the SEC, the penalties requested are conservative” but “reasonable,” considering the amount of wealth that Kwon amassed from Terraform’s stablecoin.
Further, the SEC has also proposed that Kwon be barred from serving as an officer or director of any security issuer. The defendant would also be required to disclose all his baking accounts and assets.
If the proposed remedies and civil judgment are approved, Terraform would also have a “conduct-based injunction” imposed on it to prevent repeat offenses.
Both Terraform Labs and Do Kwon have contested the SEC over the fines. The firm has proposed a maximum fine of $3.5 million, while Kwon has suggested a significantly smaller fine of $800,000.
The filing added, “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 commission’s filing follows an April 5 verdict that declared Terraform and Kwon guilty of misleading and defrauding investors over the sale of TerraUSD (UST), Luna, and wLUNA.
In the background, Kwon is currently facing charges in Montenegro following his arrest om 2023 for using a fake passport. As reported by crypto.news, the case for his extradition moved forward after the Podgorica High Court confirmed that the legal requirements had been met.
