US regulator seeks US$5.3bil fine for Terraform Labs, Do Kwon
WASHINGTON: The US Securities & Exchange Commission wants to impose a US$5.3 billion fine on Terraform Labs Pte. and its co-founder Do Kwon (pic), the inventor of the failed TerraUSD stablecoin.

Details of the proposed fine, which would be the crypto industry’s largest, come after Kwon and Terraform were found liable for fraud earlier in April following a two-week trial in New York.

Kwon and Terraform made more than $4 billion in "ill-gotten gains” from unregistered sales of tokens including LUNA and UST, the SEC said in its filing to the Southern District Court of New York. Terraform’s UST, an algorithmic stablecoin that was supposed to be pegged to the price of the US dollar, wiped out $40 billion in market value when it collapsed in 2022.

The court should send "an unequivocal message that this sort of brazen misconduct” will not be tolerated, the SEC said in the filing.

The proposed fine is comprised of a $4.2 billion disgorgement penalty and $545 million in prejudgment interest, as well as $420 million and $100 million civil penalties for Terraform and Kwon, respectively.

All told, the fine would surpass the $4.3 billion paid by Binance to settle anti-money laundering and US sanctions violations charges with the US Department of Justice in November 2023, itself one of the largest corporate agreements in US history.

Lawyers representing Kwon and Terraform challenged the SEC’s claims, arguing that token sales took place outside of the US and didn’t violate federal securities law.

Kwon was arrested in Montenegro a year ago and convicted of attempting to travel using a fake passport. He is currently awaiting extradition either to the US or his native South Korea and faces criminal fraud charges in both countries.

The SEC also asked the court for a permanent bar on Kwon, who owns 92% of Terraform, serving as an officer or director and seeks a "sworn accounting” of his assets. - Bloomberg
Terraform Labs,Do Kwon,crytocurrency,fraud,stablecoin
WASHINGTON: The US Securities & Exchange Commission wants to impose a US$5.3 billion fine on Terraform Labs Pte. and its co-founder Do Kwon, the inventor of the failed TerraUSD stablecoin.