The U.S. Securities and Exchange Commission (SEC) filed a motion seeking $5.3 billion in compensation and fines from Terraform Labs (TFL) and its founder, Do Kwon.
On April 5, a jury in the Southern District of New York found TFL and Kwon guilty of investor deception and securities fraud. The trial lasted nine days and was conducted in absentia.
According to the SEC’s demand, the company and its co-founder are required to pay $4.12 billion in compensation to investors and $545 million to cover legal costs. TFL and Kwon were also assigned civil penalties of $420 million and $100 million, respectively.
In response, lawyers for Terraform Labs proposed a “maximum possible” payment of $3.4 million. Representatives for the company’s head suggested an amount around $800,000.
In addition to the monetary penalty, the Commission urged a ban on Kwon from holding executive positions in securities-issuing firms and requested full disclosure of his accounts and assets. If approved, TFL would also face restrictions in the U.S.
“The defendants have shown no remorse for their actions. There can be no doubt that they are in a position where further violations are not only possible but likely already occurring,” the SEC stated.
The trial is proceeding without Kwon himself. He is currently awaiting extradition in Montenegro.
In early March, the High Court of Podgorica approved the extradition of the entrepreneur to South Korean authorities. However, the prosecution objected, citing procedural violations, leading to the cancellation of the process.
In South Korea, Kwon faces numerous charges, including violations of capital market laws.
Earlier, it was reported that the TFL co-founder will be released from prison after serving his sentence for attempting to cross the border with forged documents.