Terraform and Do Kwon's Lawyers Argue Against SEC's Proposed Fine of $5.3 Billion
A spokesperson for Terraform stated that the company is carefully considering its options and next steps in response to the legal proceedings.
Lawyers representing Terraform Labs and its co-founder, Do Kwon, are pushing back against the U.S. Securities and Exchange Commission's (SEC) proposed fine of $5.3 billion for fraud-related charges. Instead, they argue that a fine closer to $1 million would be more appropriate, according to a news report by The Block.
The SEC's proposal, which includes about $4.7 billion in disgorgement and prejudgment interest, along with civil penalties of $420 million for Terraform and $100 million for Kwon, was met with opposition from the defendants' legal team.
Terraform and Kwon's lawyers stated that the proposed fines should be significantly lower. They emphasized that the court should refrain from granting injunctive relief or disgorgement and, at most, impose a $1 million civil penalty against Terraform Labs (TFL).
The legal dispute stems from charges filed by the SEC in February 2023, alleging fraud related to the algorithmic stablecoin Terra USD (UST), which experienced a significant collapse in May 2022, leading to substantial financial losses.
A jury recently found both Terraform and Kwon liable for civil fraud, focusing on allegations that they misled investors and violated federal securities laws. The SEC claimed that Terraform and Kwon engaged in fraudulent activities connected to the buying and selling of Terraform securities, as well as offering and selling unregistered securities.
The disagreement over the proposed fines highlights the contentious legal battle between Terraform Labs, Do Kwon, and the SEC, with both sides advocating for their respective positions regarding the appropriate penalties for the alleged misconduct.
