DeFi

Million

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Billion

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 In a bold move, Terraform Labs, the company behind the <a style="color: #0000ff;" href="https://defi-planet.com/2022/05/terra-luna-99-crash-how-did-it-all-go-wrong/">troubled TerraUSD stablecoin and LUNA</a>, is gearing up to challenge the U.S. Securities and Exchange Commission (SEC) in court over the&nbsp; $5.3 billion fine. 
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The company is pushing for a significantly reduced penalty of just $1 million, citing jurisdictional issues and disputing the regulator’s allegations of fraud. 
Terraform Labs, led by co-founder Do Kwon, finds itself at the center of a legal storm following the collapse of the TerraUSD (UST) stablecoin in 2022. The SEC has accused the company of orchestrating a <a style="color: #0000ff;" href="https://www.sec.gov/news/press-release/2023-32">massive crypto asset securities fraud</a>, allegedly raising billions from investors through unregistered transactions between April 2018 and May 2022. 
However, Terraform Labs vehemently denies these allegations, arguing that most token sales occurred outside <a style="color: #0000ff;" href="https://www.cnn.com/2024/04/05/business/terraform-labs-do-kwon-found-liable-in-us-civil-fraud-trial/index.html">U.S. regulatory jurisdiction</a>. The company contends that there is insufficient evidence linking its activities to the substantial investor losses associated with the TerraUSD collapse. As a result, they are pushing for a drastic reduction in the proposed fine to just $1 million. 
The SEC, on the other hand, <a style="color: #0000ff;" href="https://defi-planet.com/2023/02/us-sec-sues-terraform-labs-and-do-kwon-for-fraud/">stands firm on its accusations</a> and proposed penalty. The regulator claims that Terraform Labs’ actions resulted in catastrophic losses for investors, totalling a staggering $40 billion. Thus, it emphasizes the need for accountability and deterrence in cases of securities fraud, particularly within the crypto market. 
This legal showdown follows Terraform Labs’ filing for <a style="color: #0000ff;" href="https://www.marketwatch.com/story/terraform-labs-files-for-bankruptcy-protection-in-u-s-following-2022-collapse-of-its-terrausd-luna-stablecoins-f39b403c">Chapter 11 bankruptcy protection</a> in January 2024, citing estimated assets and liabilities ranging between $100 million and $500 million. Meanwhile, Kwon <a style="color: #0000ff;" href="https://defi-planet.com/2024/02/montenegros-government-grants-extradition-request-for-former-terraform-labs-cfo-to-south-korea/">faces extradition to the U.S. from Montenegro</a>, where he fled after South Korean authorities issued an arrest warrant for him in late 2022. Interestingly, he has <a style="color: #0000ff;" href="https://defi-planet.com/2023/06/terraform-labs-ceo-do-kwon-found-guilty-of-passport-forgery-sentenced-to-prison-in-montenegro/">been sentenced to a four-month prison term by a Montenegro court</a> for forging passport documents.&nbsp; 
RELATED: <a style="color: #0000ff;" href="https://defi-planet.com/2024/02/montenegros-government-grants-extradition-request-for-former-terraform-labs-cfo-to-south-korea/">Montenegro’s Government Grants Extradition Request for Former Terraform Labs CFO to South Korea</a> 
As both parties brace for a <a style="color: #0000ff;" href="https://defi-planet.com/2023/06/legal-battle-intensifies-as-u-s-sec-challenge-terraform-and-do-kwons-motion-to-dismiss-lawsuit/">protracted legal battle</a>, Kwon faces the uncertainty of extradition to either the U.S. or South Korea, and the final ruling on the SEC’s proposed fine is pending a court decision.&nbsp; 
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The post <a href="https://defi-planet.com/2024/05/terraform-labs-challenges-secs-5-3-billion-fine-proposes-a-1-million-penalty/">Terraform Labs Challenges SEC’s $5.3 Billion Fine, Proposes a $1 Million Penalty</a> appeared first on <a href="https://defi-planet.com">DeFi Planet</a>.

Terraform Labs Challenges SEC’s $5.3 Billion Fine, Proposes a $1 Million Penalty

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