Key Points:
They argue that the majority of their stablecoins were sold overseas and thus shouldn’t be subject to such a hefty penalty.
The upcoming May 22 hearing is anticipated to address the aftermath of the verdict. The US Securities and Exchange Commission (SEC) alleged that Terraform‘s collapse in 2022, driven by the failure of its TerraUSD stablecoin, resulted in the loss of $40 billion in investor assets, prompting a lawsuit against the firm and Kwon in February 2023.
Court documents reveal the SEC’s pursuit of Terraform Labs fraud fine and prejudgment interest amounting to $4.7 billion, plus $520 million in civil penalties. Terraform, however, proposes a nominal $1 million civil penalty without disgorgement.
Terraform’s legal team contends that the firm’s token sales primarily occurred outside the US, challenging the SEC’s assertion that their activities directly caused the claimed losses. Despite being found guilty of fraud on April 5, Terraform and Kwon dispute the severity of the Terraform Labs fraud fine, which would mark a historic penalty in the crypto industry.
Meanwhile, Kwon’s lawyers argue that the SEC failed to demonstrate the foreseeable impact of his work in the US. Judge Jed Rakoff has scheduled a court appearance on May 22 to discuss potential remedies post-verdict, allowing for adjustments to previous penalty motions.
The jury’s decision in April confirmed Terraform and Kwon’s liability for civil fraud, centered on allegations of violating federal securities laws. Judge Rakoff previously ruled in favor of the SEC’s claim regarding the offering and sale of unregistered securities by Terraform and Kwon.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing. |
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