SEC seeks to fine Terraform Labs and Do Kwon $5.3 billion: No remorse

Following Terraform Labs and Do Kwon being recently found liable for civil fraud earlier this month, the U.S. Securities and Exchange Commission (SEC) has filed a motion after the ruling, seeking a combined $5.3 billion fine from both entities. In response, the former claims to be bankrupt, while the latter states that he is unemployed and unable to pay the hefty fine.

Terraform Labs Case Appears in U.S. Court, Lead Do Kwon Shows Up Handsome in Montenegro

SEC Requests Heavy Penalties for Terraform Labs and Others, Including $5.3 Billion Fine

According to court documents filed on the 19th in the Southern District of New York, the SEC, two weeks after the trial, moved to have Terraform Labs and its founder Do Kwon ordered to pay $5.3 billion in illegal gains and civil penalties.

Civil Penalty of $5.22 Billion

The documents state that the SEC is seeking Terraform and Kwon to pay approximately $4.7 billion in restitution and pre-judgment interest, along with a total of $520 million in civil penalties; $420 million for Terraform and $100 million for Kwon.

The SEC stated in the documents that the fine amount is fair and reasonable:

This fine only represents a conservative estimate of the illegal profits made by Terraform and Kwon.

Additionally, "they obtained over $4 billion, and likely much more, through fraudulent means," the SEC added.

On the 5th of this month, Terraform Labs and Do Kwon were found guilty by a jury of civil fraud charges, involving misleading investors in UST and Luna sales statements, as well as in the use cases of the Terra blockchain.

Ban on Do Kwon Holding Executive Positions

Furthermore, the SEC is also seeking to prohibit Do Kwon from holding senior executive or director positions at securities issuers, and to provide detailed information on his accounts and assets to prevent any potential future fraud or securities violations.

SEC: Do Kwon Shows No Remorse

The SEC also mentioned Do Kwon's attitude in the documents, insisting that the above penalties are necessary to prevent potential future violations:

The defendant has shown no remorse for his actions, making the preventive measures necessary.

At the same time, the SEC seems to have concerns about the testimony of Terraform Labs' current CEO, Chris Amani, in court, stating that he is still assisting in the sale of unregistered securities:

Terraform's new CEO is trying to distribute sympathy tokens LUNA 2.0 to victims to make money, earning millions of dollars in the process.

Terraform Labs and Do Kwon: No Jobs, No Money to Pay

In response, Terraform Labs stated that appropriate civil penalties should be imposed for violations, acknowledging:

The company is currently bankrupt with assets of only around $150 million.

On the other hand, Do Kwon's lawyer argued through an undisclosed legal memo that he currently has no regular employment and therefore cannot make any repayments on illegal profits.