After a jury found Kwon and TFL liable for defrauding investors on April 5, the SEC is seeking a final judgment.
This could impose severe restrictions on Kwon’s future activities and financially penalize both him and his company.
SEC Seeks Final Judgment Against Kwon and Terraform Labs
On April 19, SEC lawyers filed a motion seeking to enact a conduct-based injunction against both Kwon and TFL. This legal restraint would prevent Kwon from serving as an officer or director of any entity that issues securities. This could potentially curtail his future business endeavors in the U.S. securities sector.
The financial stakes are high, with the SEC outlining a comprehensive penalty structure to address Terraform Labs‘ fraudulent activities. The commission is seeking a total of $5.3 billion in monetary penalties. This includes $4.7 billion in disgorgement, accounting for the profits illegally obtained by the defendants. Additionally, it covers the prejudgment interest calculated on those profits. Additionally, the SEC has proposed direct civil penalties amounting to $420 million for TFL and $100 million for Kwon individually.
#SEC seeks $5.3 billion against TerraformLabs & DoKwon after fraud verdict:
– Jury finds Terraform & Kwon liable for deceptive practices.
– SEC requests $4.7B in disgorgement and interest, plus $520M in civil penalties.
– In response, Terraform proposes a $3.5M penalty, Kwon… pic.twitter.com/ZDw8w7Vw3C— @TheLordofEntry (@thelordofentry) April 23, 2024
The legal actions follow a nine-day trial that concluded earlier this month, where Kwon was notably absent. The trial proceeded without Kwon, who remains in Montenegro as courts deliberate his potential extradition to the US or South Korea. The outcome of these extradition proceedings could significantly impact the enforcement of any judgments rendered by the U.S. courts.
More About The SEC
Bloomberg reported on Monday that two SEC lawyers, Michael Welsh and Joseph Watkins, have resigned. This occurred after a federal judge sanctioned the SEC for abusing power in its case against crypto firm Debt Box.
Two SEC lawyers just resigned after a judge sanctioned them for gross abuse of power in a crypto case.
The SEC's lawsuit was "marred by false statements and misrepresentations, as well as a lack of evidence."
Gary G hanging on by a thread these days. pic.twitter.com/vJEDGsTAiR
— Yano 🟪 (@JasonYanowitz) April 22, 2024
According to sources familiar with the situation, the SEC had threatened to terminate Welsh and Watkins if they continued their employment at the agency.
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