Terraform Labs and co-founder Do Kwon have been ordered to pay billions of dollars in disgorgement and civil penalties by the SEC following a ruling in a civil case.
The order includes prejudgment interest and post-judgment interest, alongside a total of $520 million in civil penalties. Both Terraform and Kwon have separately filed briefs on potential remedies, with Terraform suggesting a maximum $3.5 million penalty and Kwon suggesting just $800,000.
In addition to the proposed disgorgement judgment, the SEC is also seeking to ban Kwon from serving as an officer or director of an issuer of securities, as well as an accounting of his assets and a full accounting of his brokerage accounts.
Terraform could also be subject to an “injunction based on conduct” which would prevent similar behavior.The proposed remedies and the civil judgment are yet to be decided by the judge. The SEC has argued that the defendants have shown no remorse for their conduct and that a clear message needs to be sent about this type of wrongdoing and the defendants’ misconduct.
The SEC’s case proceeded in the absence of Kwon, who is embroiled in separate legal proceedings in a Montenegrin court. The Terraform co-founder was arrested in March 2023 for using a false passport as he attempted to leave the country. Although later released and allowed to travel within Montenegro, questions remain over whether Kwon will be extradited to the U.S. or South Korea. He faces potential criminal charges in both jurisdictions.
