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13/06/24
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U.S. Court Orders Terraform Labs and Do Kwon to Pay Fines
On June 12, a filing in the United States District Court of the Southern District of New York stated a proposed final judgment in the case brought by the U.S. Securities and Exchange Commission (SEC) against Terraform Labs and its co-founder Do Kwon.
The court ordered Terraform to pay disgorgement of about $3.6bn, representing net profits gained from the alleged conduct. The disgorgement fine includes prejudgment interest of about $467 million.
Terraform will pay a civil penalty of $420 million, so the aggregate fines imposed on the firm is about $4.473bn, as stipulated in chapter 11 plan in the bankruptcy case. Kwon will pay a disgorgement fine of $110 million, together with a prejudgment interest of almost $14.32 million; as well as a civil penalty of $80 million.
The judgment affects Kwon’s assets in accounts at Sygnum Bank of Zurich, Switzerland, all crypto assets of the Luna Foundation Guard, and his ownership interest in all PYTH tokens obtained pursuant to the Token Grant Agreement between Kwon and Tribal Invest Corp entered on May 18, 2021.
The firm will be permitted to allow third parties to withdraw, unwind and/or unstake their positions from Terraform’s applications and protocols; as well as to dispose of cryptocurrency assets within the bankruptcy estate’s possession or control.
Terraform has been ordered to burn or destroy private keys in its possession to wallets or blockchain addresses holding Terraform Crypto Assets.
“The Commission may propose a plan to distribute the Fund subject to the Court’s approval. The Court shall retain jurisdiction over the administration of any distribution of the Fund and the Fund may only be disbursed pursuant to an Order of the Court,” reads the judgment.
Last year, the SEC sued the firm for alleged sales of unregistered securities and defrauding investors after the collapse of the Terra ecosystem. TerraUSD lost its peg to the USD two years ago, prompting losses valued at billions of dollars.
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