Lawyers for Terraform Labs and its founder, Do Kwon, are pushing for a fine of $1 million as opposed to the United States Securities and Exchange Commission (SEC)’s proposed $5.3 billion after the crypto company and its founder were found liable for fraud related-to the Terra-Luna crash in early April.
Thursday’s court filing comes after the SEC requested a $4.7 billion disgorgement and prejudgment fine and a total of $520 million in civil penalties for its role in the Terra-Luna collapse.
Terraform Labs And Do Kwon Push Back Against Billions In Fines
JUST IN: DO KWON’S LAWYERS SAY FINE SHOULD BE CLOSER TO $1 MILLION AFTER SEC DEMANDS $5.3 BILLION
— BSCN Headlines (@BSCNheadlines) April 30, 2024
Lawyers representing Kwon and Terraform Labs argued that the court “should impose at most a $1 million civil penalty” against the blockchain platform.
“The SEC has failed to prove that it is entitled to the expansive injunction and monetary sanctions it seeks against TFL,” the filing read.
SEC Goes After Kwon Post Terra-Luna Crash
The SEC originally charged the now disgraced crypto mogul in February 2023 after its algorithmic stablecoins TerraUSD and its sister token Luna crashed in tandem, wiping an estimated $40 billion from the crypto market in spring 2022.
🚨Breaking 🚨
‼️SEC moves for final judgment‼️
Terraform Labs & Do Kwon asked to pay $5.3 billion, including disgorgement & interest.
Verdict follows guilty verdict on all counts. #SEC #TerraformLabs” pic.twitter.com/iVmq7973Jk
— RK Gupta (EarnWithRK) (@earnwithrk) April 25, 2024
Kwon, who was found liable by jury trial on April 5, was not present at the trial. Instead, Terraform Labs’ founder was stuck in Montenegro for using a fraudulent passport to escape the consequences of the crash.
“For all of the crypto’s promises, the lack of registration and compliance have very real consequences for real people,” the SEC Director of Enforcement Gurbir S. Grewal said shortly after the verdict. “As the hard work of our team shows, we will continue to use the tools at our disposal to protect the investing public, but it is high time for the crypto markets to come into compliance.”
Why Terraform Labs Founder Missed His Own Trial
Meanwhile, Kwon’s fate hangs in the balance as both the U.S. and his native South Korea battle for his extradition. The Terra-Luna founder’s legal team is pushing for his release to South Korea, where he will likely face a more lenient punishment.
The SEC has been doling aggressive fines to liable crypto companies recently, including a nearly $2 billion fine against Ripple Labs and a $4.3 billion penalty on once-leading crypto exchange Binance.
Whether Kwon and his crypto company will have to pay billions to the court or face additional charges here in the States is unclear as of now.