SEC Imposes $5.2B Penalties on Terraform Labs and CEO Do Kwon for Crypto Misleading in Terra vs SEC Case
After an extensive nine-day trial, Terraform Labs and its former CEO, Do Kwon, have been found guilty of deceiving investors in the cryptocurrency market. Their actions violated the Securities Act of 1933 as they sold crypto assets without proper registration.
Gurbir S. Grewal, the Director of the SEC, fully supports the jury’s decision. He highlights the fact that both the company and Kwon provided false information regarding the stability of Terra USD and its utilization of blockchain technology. As a result, investors suffered significant losses and the market value experienced a decline. Grewal emphasizes the importance of compliance within the crypto industry and vows to continue safeguarding investors. In light of this ruling, the SEC has imposed substantial fines on Terraform Labs and Do Kwon.
The SEC has imposed a hefty penalty totaling $5.2 billion on Terraform Labs and its co-founder, Do Kwon. On April 19, the SEC submitted a claim in a New York court, seeking $4.7 billion for repayment and interest. They also demand $520 million in fines, with $420 million attributed to Terraform and $100 million to Kwon. Terraform has proposed a $3.5 million penalty, while Kwon suggested $800,000. Additionally, the SEC wants Kwon to be prohibited from serving as an officer or director of security companies, and they expect Terraform to adhere to regulations to avoid further legal challenges.
The SEC contends that the defendants have shown no remorse and may repeat their violations in the future. They accuse Terraform and Kwon of misleading investors regarding TerraUSD (UST), Luna, and wLUNA. Kwon also faces legal issues in Montenegro and could potentially face charges in the United States and South Korea.
Investors in Terra (LUNA) are closely monitoring the price fluctuations. Founder Do Kwon is currently under house arrest and may face imprisonment following his conviction for fraud. The SEC accuses him of deceiving investors about TerraUSD and its integration with a Korean app.
Despite these legal complications, Terra Luna Classic (LUNC) shows potential for growth in its price. Analysts predict a target price of $0.00058 during the bull market. Currently, Terra’s price stands at $1.049247 per LUNA/USD, with a market capitalization of $716.88 million. The 24-hour trading volume amounts to $140.55 million, and rising futures indicate a market recovery.
In the ongoing civil fraud trial, Terraform Labs has presented its closing arguments amidst allegations of deceiving investors.