In an important update to the ongoing dispute between the US Securities and Exchange Commission (SEC) and Terraform Labs, a jury has determined that both the blockchain platform and its co-founder Do Kwon are responsible for civil deceit regarding the collapse of the Terra system in 2022.
The SEC has asked the court for a large amount of money, both in the form of disgorgement and civil penalties, as a reaction.
SEC Scores Victory As Jury Finds Terraform Labs And Do Kwon Guilty
In February 2023, the SEC brought forth an initial lawsuit against Terraform Labs and Do Kwon. The allegation was that they masterminded a significant crypto fraud, primarily centered around the selling of digital assets such as LUNA and the stablecoin Terra USD (UST).
After the latest decision in the civil trial, the jury has concluded that the defendants have committed fraud. This finding will strengthen the Securities and Exchange Commission’s (SEC) campaign against fraudulent practices in the digital asset sector.
Based on the SEC’s filing on April 5, 2024, the jury ruled in the SEC’s favor on all counts. The SEC is now asking the court for two remedies: an injunction to stop Terraform Labs and Do Kwon from breaking securities laws any further, and a combined penalty of approximately $4 billion in the form of joint and several disgorgements.
The SEC is proposing additional penalties: $545 million for prejudgment interest, a civil fine of $560 million combined for Terraform Labs and Do Kwon, an injunction prohibiting certain actions by the defendants, a ban on Do Kwon from serving as an officer or director, and a court order declaring that some of Terraform Labs’ financial penalties for fraud cannot be discharged in bankruptcy.
Divergent Views On Remedies
In the ongoing civil case between the SEC and Terraform Labs, along with its founder Do Kwon, both parties have presented their suggested solutions as part of their filings.
Terraform Labs proposes paying a fine up to $3.5 million, whereas Do Kwon asks for a penalty amounting to $800,000.
Furthermore, the SEC’s request includes asking for an injunction that prevents Terraform Labs from taking part in cryptocurrency transactions or encouraging such activities.
Instead of using the formal legal terms, Terraform Labs contends that the SEC needs to present stronger evidence to justify a conduct-injunction against them, as such an order could limit lawful activities. The defendants continue their opposition to both injunctive relief and disgorgement.
The defense argues against granting injunctions or orders to give back profits, and any civil penalties should be decided based on the SEC’s proof of domestic token sale infringements.
As the legal proceedings unfold, the court’s ruling on the SEC’s request for fines against Terraform Labs and Do Kwon will carry significant consequences for Terraform Labs, Do Kwon, and the entire digital asset market.
After the market recovers from a major decline, Luna Classic’s token, LUNC, has seen a substantial decrease in value, dropping by more than 25%, within just the last month.
Instead, LUNC experienced a modest gain of 2% within the past 24 hours, resulting in its present trading value of $0.0001128.
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2024-04-24 02:11