The U.S. Securities and Exchange Commission (SEC) submitted the “Final Consent Judgment Proposal” on Wednesday, requesting New York Southern District Judge Jed Rakoff to approve the plan. According to the proposal, Terraform will pay $3.58 billion in ill-gotten gains, $420 million in civil penalties, and prohibit Do Kwon from becoming an executive or director of any public company.
Despite Terraform and Do Kwon’s lawyers constantly requesting a significant reduction in the total amount of fines, they ultimately agreed to a fine of up to $4.47 billion, including forfeited gains, pre-judgment interest, and civil penalties, with the settlement agreement still pending approval by the responsible New York judge Jed Rakoff.
Do Kwon must personally pay at least $204,320,196 to distribute to the affected investors, although it is unclear what criteria determine the affected investors.
Additionally, Terraform and Do Kwon will be permanently banned from trading any cryptocurrency securities.
SEC: Deterrence for Wrongdoers
According to CoinDesk, the 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 trying to evade federal securities laws by setting new standards of conduct for cryptocurrency assets. The multi-billion dollar judgment against the defendants provides meaningful and prompt compensation to investment victims.
The trial of Terraform and Do Kwon has had its twists and turns, including Do Kwon’s initial escape, subsequent extradition between the U.S. and South Korea, and ultimately the success of the U.S. SEC.
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, so how will Terraform repay the excessive fines?
Do Kwon
SEC
Terraform
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