Terraform Labs, Do Kwon to Discuss Remedies in SEC Lawsuit in May

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After a jury found Terraform Labs and co-founder Do Kwon liable for fraud in a case with the United States Securities and Exchange Commission (SEC), a federal judge ordered the parties to discuss proposed remedies ranging from millions to billions of dollars.

In an April 29 filing in the U.S. District Court for the Southern District of New York, Judge Jed Rakoff said lawyers representing the SEC, Kwon, and Terraform should appear in court on May 22 to present arguments for proposed remedies after the jury verdict. 

Terraform Labs, Do Kwon to Discuss Remedies

All parties have already submitted filings on their respective requests for disgorgement and civil penalties, but Judge Rakoff’s order allowed supplements before the court appearance.

The SEC requested that Kwon and Terraform pay roughly $4.7 billion in disgorgement and prejudgment interest and a combined $520 million in civil penalties. 

$1M in Civil Penalty

Terraform’s legal team suggested a $1 million civil penalty and no “injunctive relief or disgorgement.” They suggested that no injunctive relief or disgorgement should be granted, as the requested funds would have to be obtained from the Luna Foundation Guard (LFG), a “non-party” in the civil case.

Both parties will have until May 6 and May 1, respectively, to file supplements to their existing proposals.

On April 5, a jury found Terraform and Kwon liable for defrauding investors after a two-week trial with the SEC. Kwon could not attend the trial in person due to his 2023 arrest in Montenegro for using falsified travel documents. 

Terraform Labs Co-Founder Remains in the Country

The Terraform co-founder remains in the country as its courts weigh extradition requests from the U.S. and South Korea, and at the time of publication, it was unclear if he would be able to go to the U.S. court on May 22.

Bankruptcy proceedings for Terraform have been ongoing since the company filed for Chapter 11 protection in January. The firm reported between $100 and $500 million in estimated liabilities and assets at the time.

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