Regulators in the United States are seeking a hefty $5.3 billion in fines from Terraform Labs and its co-founder, Do Kwon, after a civil case verdict. The Securities and Exchange Commission (SEC) has requested $4.7 billion in disgorgement and prejudgment interest from Kwon and Terraform Labs, as stated in an April 19 filing with the U.S. District Court for the Southern District of New York.

According to the SEC, Kwon and Terraform Labs have not shown remorse for their actions, and there is a concern that additional violations may occur in the future. In addition to the $4.7 billion penalty, the commission is also seeking $420 million from Terraform and $100 million from Kwon as combined civil penalties. The SEC considers these penalties to be “conservative” yet “reasonable” given the wealth accumulated by Kwon through Terraform’s stablecoin.

The SEC has recommended that Kwon be prohibited from serving as an officer or director of any security issuer and that he disclose all his banking accounts and assets. If the proposed remedies and civil judgment are approved, Terraform would also face a conduct-based injunction to prevent future offenses.

Both Terraform Labs and Do Kwon have challenged the SEC over the fines. The firm has suggested a maximum fine of $3.5 million, while Kwon has proposed a significantly lower fine of $800,000. The SEC filing emphasizes the need for the court to send a clear message that such misconduct and attempts to create new rules for crypto markets in violation of federal securities laws will not be tolerated.

The recent verdict on April 5 found Terraform and Kwon guilty of misleading and defrauding investors in the sale of TerraUSD (UST), Luna, and wLUNA. Meanwhile, Kwon is facing charges in Montenegro after being arrested in 2023 for using a fake passport. The case for his extradition has progressed following confirmation by the Podgorica High Court that all legal requirements have been met.

For more updates on the situation surrounding Terraform Labs and Do Kwon, stay tuned for the latest news on Global Crypto News.

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