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On May 22, the U.S. District Court for the Southern District of New York is set to consider proposed financial remedies from Terraform Labs and its co-founder, Do Kwon, following a fraud verdict. The court will hear arguments over the SEC's demand for nearly $5.3 billion in penalties versus a mere $1 million proposed by Terraform’s legal team.
Court Orders Terraform Labs, Do Kwon to Discuss Remedies Ranging into Billions After Fraud Verdict
Following a jury's verdict of fraud against Terraform Labs and Do Kwon in a dispute with the SEC, a federal court has issued a significant order. According to Cointelegraph, the court has mandated the parties to delve into proposed remedies that could range from millions to billions of dollars, underscoring the financial gravity of the case.
On April 29, Judge Jed Rakoff of the U.S. District Court for the Southern District of New York issued an order. This order requires the SEC, Kwon, and Terraform to appear in court on May 22. This appearance aims to submit arguments for suggested remedies following the jury verdict. This ruling allows for amendments to the motions for disgorgement and civil penalties that have already been filed.
SEC Seeks $5.2 Billion in Penalties from Terraform, Kwon as Legal Battles and Bankruptcy Proceedings Continue
The SEC recommended that Kwon and Terraform pay approximately $4.7 billion in disgorgement, prejudgment interest, and $520 million in civil penalties. Terraform's legal team proposed a $1 million civil penalty but no "injunctive relief or disgorgement." Both parties have until May 6 and May 1 to add to their existing offers.
A jury found Terraform and Kwon responsible for deceiving investors on April 5 following a two-week SEC trial. Kwon could not attend the trial in person because of his 2023 arrest in Montenegro for using fake travel documents. The Terraform co-founder is still in the nation as its courts consider extradition demands from the United States and South Korea, and it was unclear at the time of writing whether he will be allowed to appear in a U.S. court on May 22.
Terraform's bankruptcy processes have been underway since it filed for Chapter 11 protection in January. At the time, the firm claimed projected liabilities and assets ranging from $100 million to $500 million.
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