A groundbreaking new development has emerged in the Terra (LUNA) and SEC case, with the SEC seeking a staggering $5.3 billion fine against Terraform Labs and its co-founder, Do Kwon. The SEC alleges that the collapse of the $40 billion Terra ecosystem in 2022 was directly linked to the fraudulent activities of Terraform Labs and Kwon.
The recent conviction of Terraform Labs and Kwon on fraud charges has prompted the SEC to file for a final judgment, demanding substantial damages and precautionary interest in the amount of $4.74 billion. Furthermore, the regulator is seeking an additional $520 million in damages, with $420 million targeted at Terraform Labs and $100 million directly at Kwon.
The SEC memo filed with the court justifies the high amount by claiming that Kwon and Terraform Labs obtained over $4 billion in illicit profits from their illegal actions, and likely even more. The court documents reveal that the sales of LUNA and MIR to institutional investors reached $65.2 million and $4.3 million, respectively, while Luna Foundation Guard (LFG) facilitated $1.8 billion in LUNA and UST sales. Moreover, investors purchased $2.3 billion worth of UST across various cryptocurrency trading platforms between June 2021 and May 2022.
In addition to the substantial fines, the SEC is also requesting injunctive relief to prevent Kwon and Terraform Labs from committing future securities violations, as well as prohibiting Kwon from serving as an officer or director of a public company. The SEC argues that these measures are necessary to deter future violations, as the defendants have shown no remorse for their actions and have the potential to commit further violations.
This critical new development in the Terra and SEC case highlights the seriousness of the allegations against Terraform Labs and Kwon, and the potential impact it could have on the crypto industry as a whole. The outcome of this case could set a precedent for future regulatory actions and shape the future of decentralized finance.