Guard

Foundation

<p><strong><em>After the accusation by the SEC, Terraform’s legal team argued about the astonishing charges and appealed for a reduction.</em></strong></p> 
<p>Terraform’s lawyers have opposed a request from the SEC for $5.3 billion in disgorgement and civil penalties against the company and its co-founder, Do Kwon. They have suggested that the court impose a maximum civil penalty of $1 million after a jury found the platform and Kwon liable for fraud.&nbsp;</p> 
<h2 class="wp-block-heading" id="strong-the-story-began-at-the-start-of-april-strong"><strong>The Story Began at the start of April</strong></h2> 
<p>Former CEO of Terraform Labs, Do Kwon, was found guilty of civil fraud charges related to allegations made by the US Securities and Exchange Commission (SEC). The accusations stem from claims that the company and its CEO misled investors before its cryptocurrency collapsed in 2022, leading to a market crisis.&nbsp;</p> 
<p>The SEC accused Terraform and its CEO of deceiving investors about the stability of TerraUSD and making false claims about their blockchain technology. Kwon now faces financial penalties and orders that would prevent him from participating in the securities industry.</p> 
<h3 class="wp-block-heading" id="strong-sec-said-terraform-was-built-on-lies-strong"><strong>SEC Said Terraform was “built on lies”</strong></h3> 
<p>During closing statements, the SEC attorney, Laura Meehan, argued that the platform’s success story was “built on lies”. She added, “If you swing big and you miss, and you don’t tell people that you came up short. That is fraud.” In defense of the company, Louis Pellegrino, an attorney for Terraform, told the jury that the SEC’s case relied on statements taken out of context.&nbsp;</p> 
<h3 class="wp-block-heading" id="strong-terraform-s-legal-team-argument-strong"><strong>Terraform’s Legal Team Argument</strong></h3> 
<p>Terraform’s legal team argued that the court should not grant any injunctive relief or disgorgement, as the funds would have to be obtained from the Luna Foundation Guard (LFG), a “non-party” in the civil case. According to the filing, the SEC was required to name LFG as a defendant or relief defendant to pursue disgorgement from them.&nbsp;</p> 
<p>LFG, not TFL (<a href="https://www.thecoinrepublic.com/2024/03/14/despite-regulatory-matters-terraform-labss-request-approved/" target="_blank" rel="noreferrer noopener">Terraform Labs</a>), is the rightful owner of the funds, and LFG conducted the token sales that generated these funds. Since TFL did not receive these funds, the statute prohibits any order against TFL to return LFG funds.</p> 
<p>Terraform argued that the SEC’s proposed multibillion-dollar penalty was excessive and that a fine of $1 million would be more appropriate. Kwon also contested the SEC’s motion, stating that disclosing his account and asset details would violate his Fifth Amendment right against self-incrimination.</p> 
<p>Terraform’s spokesperson stated that the company considered its options and next steps after the verdict. Kwon was not physically present during the trial or verdict because he could not travel outside Montenegro. In March 2023, the Terraform co-founder was arrested in the country for using falsified travel documents. U.S. and South Korean authorities are currently vying for his extradition.</p> 
<h3 class="wp-block-heading" id="strong-conclusion-strong"><strong>Conclusion</strong></h3> 
<p>Terraform’s lawyers oppose the SEC’s request for $5.3 billion in disgorgement and penalties, suggesting a maximum civil penalty of $1 million. They argue against injunctive relief or disgorgement, as the funds must come from a “non-party” in the Luna Foundation Guard case.</p> 
<h4 class="wp-block-heading"><strong>Disclaimer</strong></h4> 
<p>The views and opinions stated by the author or any people named in this article are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks, cryptos, or other related indexes comes with a risk of financial loss.</p>

Terraform’s Lawyers Proposed for Diminution of Penalty Charges

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Thecoinrepublic.com

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