SEC Seeks $5.3 Billion From Do Kwon and Terraform Labs

The SEC is ordering Kwon and Terraform Labs to pay a cumulative $5.3 million in disgorgement and civil penalties after a jury returned a guilty verdict on all counts earlier this month.

The U.S. Securities and Exchange (SEC) Commission (SEC) has entered a motion for final judgement against Terraform Labs (TFL) and its founder and former CEO Do Kwon.

In a motion filed on April 19, lawyers for the SEC asked the court to impose a conduct-based injunction on both Kwon and TFL, and to bar Kwon from acting as an officer or director of any securities issuer in the future.

The SEC is seeking billions of dollars in monetary penalties from the TFL and Kwon, requesting $4.7 billion in disgorgement, including prejudgment interest. They are also seeking a payment of $420 million from TFL and $100 million from Kwon in civil penalties.

On April 5, a jury found Kwon and TFL liable for defrauding investors, following a nine-day trial that took place without Kwon present, as courts in Montenegro still hash out the details of whether he will be extradited to the U.S. or South Korea.

“As the hard work of our team shows, we will continue to use the tools at our disposal to protect the investing public, but it is high time for the crypto markets to come into compliance,” said SEC Division of Enforcement Director Gurbir S. Grewal in a statement that followed the verdict.

Meanwhile, Bloomberg reported on Monday that two SEC lawyers have resigned after a federal judge imposed sanctions on the securities regulator for its gross abuse of power in a case against crypto firm Debt Box.

People familiar with the matter told Bloomberg that the SEC had threatened to terminate the lawyers in question  – Michael Welsh and Joseph Watkins – if they stayed on at the agency.

Ripple Labs, the company behind the XRP token, has also filed an opposition to the SEC’s request for the firm to pay $2 billion in penalties for its institutional sales of XRP.

“In a case that had no allegations (or findings) of recklessness or fraud, and in which Ripple won on significant issues, the SEC’s ask is just more evidence of its ongoing intimidation against all of crypto in the U.S,” wrote Stuart Alderoty in a post on X.