{"id":10529,"date":"2024-04-23T23:22:03","date_gmt":"2024-04-23T23:22:03","guid":{"rendered":"https:\/\/www.bitrabo.com\/discover\/terraform-labs-and-do-kwon-face-5-3b-penalties-in-sec-fraud-case\/"},"modified":"2024-04-23T23:22:03","modified_gmt":"2024-04-23T23:22:03","slug":"terraform-labs-and-do-kwon-face-5-3b-penalties-in-sec-fraud-case","status":"publish","type":"post","link":"https:\/\/www.bitrabo.com\/discover\/terraform-labs-and-do-kwon-face-5-3b-penalties-in-sec-fraud-case\/","title":{"rendered":"Terraform Labs And Do Kwon Face $5.3B Penalties In SEC Fraud Case"},"content":{"rendered":"

In a significant development in the ongoing legal battle between the United States Securities and Exchange Commission (SEC) and Terraform Labs, a jury has found the blockchain protocol and its co-founder Do Kwon liable for civil fraud over the crash of the Terra ecosystem in 2022.\u00a0<\/p>\n

In response, the SEC has filed a motion <\/a>seeking billions of dollars in disgorgement and civil penalties against the defendants.<\/p>\n

<\/span>SEC Scores Victory As Jury Finds Terraform Labs And Do Kwon Guilty<\/span><\/h2>\n

The SEC’s initial lawsuit, filed in February 2023, accused Terraform Labs and Do Kwon of orchestrating a large-scale crypto scam involving the sale of various digital assets, particularly LUNA and the algorithmic stablecoin Terra USD (UST).\u00a0<\/p>\n

Following the recent verdict in the civil case, the jury has determined that the defendants are indeed responsible for fraud, providing the SEC with a significant boost in its ongoing efforts to crack down on fraudulent activities within the digital asset industry.<\/p>\n

According to the SEC’s motion filed on April 5, 2024, the jury returned a verdict in favor of the SEC on all counts. The SEC is now seeking relief: an injunction against Terraform Labs and Do Kwon to prevent further violations of the securities laws and joint and several disgorgements of around $4 billion. <\/p>\n

In addition, the SEC is seeking $545 million in prejudgment interest, a civil penalty of $420 million for Terraform Labs and $100 million for Do Kwon, a conduct-based injunction against the defendants, an officer and director bar against Do Kwon, and a declaration that the fraud-related monetary sanctions imposed on Terraform Labs are nondischargeable in bankruptcy.<\/p>\n

<\/span>Divergent Views On Remedies<\/span><\/h2>\n

The SEC and the defendants, Terraform Labs and Do Kwon, have submitted briefs outlining their proposed remedies in the civil case.\u00a0<\/p>\n

Terraform Labs has sought <\/a>a maximum civil penalty of $3.5 million, while Do Kwon has requested a penalty of $800,000.\u00a0<\/p>\n

However, the SEC’s motion also seeks a conduct-based injunction, prohibiting Terraform Labs from participating in crypto asset transactions and engaging in activities to induce such transactions.<\/p>\n

While the defendants argue against injunctive relief and disgorgement, Terraform Labs maintains that the SEC must meet a \u201chigher burden of proof\u201d to obtain a conduct-based injunction, as it would restrict legally permissible conduct.\u00a0<\/p>\n

The defense asserts that injunctive relief and disgorgement should not be granted, and any civil penalty should be determined based on the SEC’s evidence of \u201cdomestic token sales violations.\u201d<\/p>\n

As the case progresses, the court’s decision on the SEC’s motion for penalties will have far-reaching implications for Terraform Labs, Do Kwon, and the wider digital asset industry.<\/p>\n

<\/p>\n

As the market rebounds from a significant correction, the protocol’s native token, Luna Classic (LUNC), has experienced a notable price drop of over 25% in the past month alone.\u00a0<\/p>\n

However, a modest recovery of 2% in LUNC’s price over the last 24 hours, bringing its current trading price to $0.0001128.<\/p>\n

Featured image from Shutterstock, chart from TradingView.com <\/p>\n","protected":false},"excerpt":{"rendered":"

In a significant development in the ongoing legal battle between the United States Securities and Exchange Commission (SEC) and Terraform Labs, a jury has found the blockchain protocol and its co-founder Do Kwon liable for civil fraud over the crash of the Terra ecosystem in 2022.\u00a0 In response, the SEC has filed a motion seeking […]<\/p>\n","protected":false},"author":1,"featured_media":10530,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"slim_seo":{"title":"Terraform Labs And Do Kwon Face $5.3B Penalties In SEC Fraud Case - Bitrabo","description":"In a significant development in the ongoing legal battle between the United States Securities and Exchange Commission (SEC) and Terraform Labs, a jury has found"},"footnotes":""},"categories":[316],"tags":[3629,796,1577,696,1642,1988,3630,520,1987],"class_list":["post-10529","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crypto-news","tag-5-3b","tag-case","tag-face","tag-fraud","tag-kwon","tag-labs","tag-penalties","tag-sec","tag-terraform"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/posts\/10529","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/comments?post=10529"}],"version-history":[{"count":0,"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/posts\/10529\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/media\/10530"}],"wp:attachment":[{"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/media?parent=10529"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/categories?post=10529"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/tags?post=10529"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}