Terraform Labs and Do Kwon Challenge the Proposed $5.3B Penalty: Report

• Terraform Labs challenges the huge $5.3 billion penalty imposed by the SEC in the legal case.
• The firm requests the court for a lower penalty of $1 million arguing that Terraform’s most of the stablecoins were sold overseas.
• Judge Jed Rakoff orders the lawyers representing Terraform and the SEC to assemble in the court on May 22.

According to a recent Bloomberg report, Terraform Labs and its founder, Do Kwon, challenged the huge $5.3 billion penalty proposed by the Securities and Exchange Commission (SEC) in the lawsuit. Claiming that most of the firm’s stablecoins were sold overseas, the company requested the court to charge a significantly lower penalty of $1 million.

On April 5, a jury found Do Kwon liable for the collapse of the collapse of Terraform, which wiped out $40 billion in investor assets, leading to a severe crypto winter. While Kwon and Terraform were found guilty of defrauding investors regarding the sale of TerraUSD (UST), Luna (LUNA), and wLUNA, the regulators sought approximately $4.7 billion in disgorgement and prejudgment interest from them. In addition, the SEC charged a total of $520 million in civil penalties.

However, Terraform pleaded the court not to grant “any injunctive relief of disgorgement,”  arguing that the regulators failed to prove that it is “entitled to the expansive injunction and monetary sanctions it seeks.” Also, the platform stated that the proposed fines would have to be obtained from the Luna Foundation Guard (LFG), an entity not involved in the civil case. The court filing read, “.

“In conclusion, the Court should not grant any injunctive relief or disgorgement, and should impose at most a $1 million civil penalty against TFL.”

In an April 29 filing, Judge Jed Rakoff of the US District Court for the Southern District of New York ordered that the SEC, Kwon, and Terraform Labs’ lawyers assemble in the court on May 22 to discuss the proposed remedies.