The United States Securities and Exchange Commission has filed a lawsuit against Terraform Labs and Do Kwon. They have demanded that the company pay billions in civil fines and disgorgement. The SEC filed a petition as a response to a judgment in a civil case, with the aim of holding Terraform Labs (and its co-founder Do Kwon) responsible for alleged violations.
Disgorgement and civil penalties: The Securities and Exchange Commission has ordered that Terraform Labs and Kwon repay approximately $4.7 billion as disgorgement and interest before judgment. Disgorgement refers to the repayment of earnings obtained through dishonest methods, while prejudgment interests are a compensation for time value of money. The Securities and Exchange Commission has also requested a total civil penalty of $520,000,000, Terraform Labs is responsible for $420,000,000 and Kwon for $100,000,000.
Terraform Labs & Kwon both have submitted their briefs to the civil case in which they suggest several possible solutions. Terraform Labs proposed a civil penalty maximum of $3.5 Million, while Kwon suggested an amount of $800,000. The SEC has proposed much higher sums than these estimates.
Securities and Exchange Commission is considering additional measures to prevent future violations, on top of the civil penalties and disgorgement already imposed. The Securities and Exchange Commission (SEC) has asked that Kwon not be allowed to act as an officer or a director of a security company. The Securities and Exchange Commission also wants to obtain a "conduct based injunction", which would guarantee that Terraform Labs and Kwon will not commit similar breaches in the future.
SEC enforcement has been demonstrated by the SEC's filing of a civil penalty and disgorgement request against Terraform Labs. This action shows the regulatory agency’s commitment to protecting investors and prosecuting anyone who violates securities laws. The Securities and Exchange Commission (SEC), by ensuring that people and companies are held accountable for their actions, strives to maintain the integrity of financial markets and encourage fair practices.
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