Terraform Labs and Founder Hit with $5.3 Billion SEC Penalty: Latest Updates
The founder of Terraform Labs, Do Kwon, is facing a financial nightmare after the United States Securities and Exchange Commission (SEC) filed a motion demanding $5.3 billion in fines. The SEC’s civil Terra-Luna case against the crypto mogul has resulted in Kwon and Terraform Labs being asked to pay nearly $4.7 billion in disgorgement and prejudgment interest, with Kwon also forfeiting $100 million in civil penalties and Terraform Labs paying $420 million.
The SEC is also seeking to bar Kwon from operating as a securities officer and director of any securities issuer, as well as issuing an injunction against both Kwon and Terraform Labs. This comes after a two-week trial found Kwon liable for fraud following the collapse of his algorithmic stablecoin, TerraUSD, and its sister token, Luna, which led to a $40 billion crypto market crash.
Kwon, who was not present at the trial due to being stuck in Montenegro after using fake travel documents to escape legal consequences, is now facing extradition battles between the United States and South Korea. The SEC’s Director of Enforcement, Gurbir S. Grewal, emphasized the need for compliance in the crypto markets to protect investors.
The SEC’s regulation-by-enforcement approach has faced criticism from the crypto community, with officials resigning and Commissioner Hester Pierce publicly criticizing the agency’s tactics. It remains to be seen how Kwon will respond to the SEC’s demands for billions in penalties.
