The U.S. Securities and Exchange Commission (SEC) submitted a “Final Consent Judgment Proposal” on Wednesday, requesting approval from Judge Jed Rakoff of the Southern District of New York. According to the proposal, Terraform will pay $3.58 billion in illegal proceeds, $420 million in civil penalties, and prohibit Do Kwon from serving as an executive or director of any public company.
Despite Terraform and Do Kwon’s lawyers constantly requesting a significant reduction in the total fine amount, they ultimately agreed to a fine of up to $4.47 billion, including disgorgement of proceeds, pre-judgment interest, and civil penalties. The settlement agreement is still pending approval from Judge Jed Rakoff responsible for this case.
Do Kwon must personally pay at least $204,320,196 to distribute to affected investors, although it is unclear what criteria will be used to identify the affected investors.
In addition, Terraform and Do Kwon will be permanently prohibited from trading any cryptocurrency securities.
SEC stated in court documents: “If approved, the proposed judgment will not only send a clear deterrent message to wrongdoers, but also send a clear message to those attempting to evade federal securities laws by setting new behavior standards for cryptocurrency assets. The multi-billion dollar judgment against the defendants provides meaningful and swift compensation for investment victims.”
The trial of Terraform and Do Kwon took a dramatic turn, including Do Kwon’s initial escape, extradition between the U.S. and South Korea, and ultimately the SEC’s success.
A spokesperson for Terraform Labs declined to comment. The company had previously stated that it is currently in a state of bankruptcy, with only about $1.5 billion in assets remaining. In the face of excessive fines, how will Terraform repay?
Do Kwon
SEC
Terraform