As a seasoned crypto investor with a keen interest in the latest developments within the industry, I’ve been closely following the ongoing legal battle between Terraform Labs and the United States Securities and Exchange Commission (SEC). The recent jury verdict finding Terraform and its co-founder Do Kwon liable for fraud has sent shockwaves through the community.
Following a fraud verdict against Terraform Labs and its co-founder Do Kwon by a jury in a SEC case, the court mandated that the involved parties engage in talks over potential reparations, which could span from millions to billions of dollars.
In a filing dated April 29 in the U.S. District Court for the Southern District of New York, Judge Jed Rakoff directed lawyers representing the SEC, Kwon, and Terraform to make their arguments for proposed remedies during a court hearing on May 22. While all parties have previously submitted proposals for disgorgement and civil penalties, Judge Rakoff’s order permitted additional submissions before the scheduled appearance.
The Securities and Exchange Commission (SEC) proposed that Kwon and Terraform Labs pay approximately $4.7 billion in disgorgement and prejudgment interest, as well as a collective fine of $520 million in civil penalties. In contrast, Terraform’s legal team advocated for a penalty of only $1 million in civil damages and rejected the SEC’s demands for injunctive relief or disgorgement. Both parties have until May 6 (for Kwon) and May 1 (for Terraform Labs) to submit additional documents supporting their respective positions.
On April 5, a jury reached the verdict that Terraform and Kwon were responsible for defrauding investors following a two-week trial with the SEC. Due to his arrest in Montenegro in 2023 using fake travel documents, Kwon was unable to attend the trial in person. The co-founder of Terraform is currently in Montenegrin custody as the courts consider extradition requests from both the U.S. and South Korea. At the time of publication, it remained uncertain if he would be able to appear before the U.S. court on May 22.
Since early this year, Terraform has been going through the process of reorganizing its finances under Chapter 11 bankruptcy. At the time of filing, the company disclosed an estimated range of $100 million to $500 million for both its liabilities and assets.
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2024-05-01 00:56