SEC Proposes $5.3 Billion In Fines for Terraform Labs and Co-Founder Do Kwon

By: Eliza Bennet

The U.S. Securities and Exchange Commission (SEC) is seeking almost $5.3 billion in fines from MS Terraform Labs and its co-founder, Do Kwon following alleged violations of U.S securities laws and charges of fraud. This move springs from the dramatic collapse of the Terra ecosystem, which is valued at $40 billion, in 2022.

A legal filing from April 19 has outlined the SEC's requested sanctions, majorly comprising a disgorgement of $4.2 billion plus a prejudgment interest of $545.7 million. The regulator is also demanding a fine of $420 million from Terraform Labs and a $100 million fine against Do Kwon respectively.

Furthermore, the SEC is intending to enforce non-monetary resolutions inclusive of injunctions that stipulate adherence to the laws, with the goal of hindering any further violation of the Securities Act of 1933 and the Exchange Act of 1934. The defendants have subsequently responded to the mandated remedies in associated filings, with Terraform Labs asserting that US court should impose remedies solely based on token sales verified to have occurred within the United States.