SEC pursues over $5 billion penalty against Do Kwon and Terraform Labs

The SEC is going after Terraform Labs and its co-founder Do Kwon big time. After a verdict slammed them with guilt, the SEC filed for a whopping $5.2 billion in penalties. This isn’t just chump change; we’re talking about a $4.7 billion disgorgement plus $520 million in fines split between Terraform ($420 million) and Kwon ($100 million). This legal bomb dropped in a New York court on April 19.

Kwon and his company didn’t just sit back. They threw their numbers into the ring, suggesting far less in damages — $3.5 million for Terraform and a mere $800,000 for Kwon. Yeah, that’s a drop in the ocean compared to what the SEC wants.

More Than Money on the Line

But wait, there’s more. The SEC isn’t just after their wallets. They want Kwon out of the officer chair for good. If the court agrees, he won’t be able to serve as a director or officer in any securities business. Plus, they’re pushing for a conduct-based injunction against Terraform. Basically, they want to make sure the firm doesn’t pull any stunts like this again. The court’s still out on this one, so we’ll see how the judge rules.

In the SEC’s words, they described Kwon and his team as unremorseful and prone to breaking the rules again. They’re pushing the court to send a clear message that messing with market rules is a no-go.

Back on April 5, the curtain was pulled back to show Terraform and Kwon’s shady dealings. They were found guilty of fooling investors about TerraUSD (UST), Luna, and wLUNA. Following this, a Terraform rep said they were figuring out what to do next. Not a great spot to be in.

The Trial Winds Down

As this drama nears its end, the SEC’s lawyers have been vocal about Terraform’s fabricated tales, especially about the stability of their algorithmic stablecoin UST and some shady app deals in South Korea. One of Terraform’s own, Louis Pellegrino, argued that Kwon was on the level in his public chats, claiming the SEC got it twisted.

This whole mess started over a year ago when the SEC accused Terraform and Kwon of a multi-billion-dollar fraud scheme in February 2023. During the trial, SEC attorneys likened Terra to a house of cards—a setup doomed to collapse, which it did in 2022, triggering a domino effect that hit the entire crypto market hard.

Meanwhile, Kwon’s been chilling in Montenegro, avoiding the courtroom drama back in the States. He got nabbed there in March 2023 for faking travel docs. As of now, he’s still there, waiting to see if he’ll get extradited to the U.S. or South Korea.

And for a bit of extra drama, the court scene’s been bustling with other crypto bigwigs facing the music. Former Celsius CEO Alex Mashinsky is set for a criminal trial in January 2025, and former Binance CEO Changpeng Zhao has his sentencing in a couple of days, on April 30.

So, there you have it—Kwon and Terraform are in a heap of trouble, and the SEC isn’t pulling any punches.