Terraform Labs and founder challenge SEC's $5.3 billion fine

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Terraform Labs and founder challenge SEC's $5.3 billion fine

Published: 30 Apr. 2024, 18:39

JIN MIN-JI
jin.minji@joongang.co.kr

Police officers escort Terraform Labs co-founder Do Kwon after he served a sentence for document forgery, in Podgorica, Montenegro, March 23, 2024. [REUTERS/YONHAP]

Lawyers representing crypto company Terraform Labs and its disgraced founder Do Kwon demanded a reduced fine from the U.S. Securities and Exchange Commission (SEC), which proposed a $5.3 billion fine over the crash of TerraUSD and Luna coins in 2022.

The SEC requested a New York court to impose $5.3 billion worth of fines on Terraform Labs and Kwon for the collapse of TerraUSD and Luna coins, which wiped out some $40 billion in valuation in 2022, according to a court filing on April 19.

The SEC accused Terraform Labs and Kwon of misleading investors about the coins and their algorithm.

The lawyers said the fine should be around $1 million, according to a report from The Block on Monday.

“The court should not grant any injunctive relief or disgorgement and should impose at most a $1 million civil penalty against TFL (Terraform Labs),” the lawyers said.

The SEC proposed Kwon and Terraform Labs pay $4.7 billion in disgorgement and prejudgment interest for their role in the coin collapse. It also asked the court to order the company and its founder to pay $420 million and $100 million, respectively, in civil penalties.

In early April, a Manhattan jury agreed with the SEC that Terraform Labs deceived investors about the nature of its coins under Kwon’s scheme.

Kwon was arrested in Montenegro last year after months on the run with forged passports. He is being sought after by both Korea and the United States.

BY JIN MIN-JI [jin.minji@joongang.co.kr]