The U.S. Securities and Exchange Commission (SEC) has initiated legal proceedings against Terraform Labs and its co-founder, Do Kwon, by demanding the company pay civil penalties and restitution of billions of dollars. The SEC filed a petition in response to a judgment in a civil case, and the purpose of this move is to hold Terraform Labs and Kwon accountable for the alleged violations they committed.
Disgorgement and Civil Penalties: The Securities and Exchange Commission (SEC) has required Terraform Labs and Kwon to pay approximately $4.7 billion in disgorgement and prejudgment interest. Disgorgement is the process of returning income obtained unfairly, while prejudgment interest is a type of compensation for the time value of money. Additionally, the Securities and Exchange Commission is seeking a total of $520 million in civil penalties, with Terraform Labs responsible for $420 million and Kwon responsible for $100 million.
Possible solutions: Terraform Labs and Kwon have both filed their briefs in the civil case, proposing several possible solutions to the problem. In their proposal, Terraform Labs proposed a maximum civil penalty of $3.5 million, while Kwon proposed a fine of $800,000. The amounts proposed by the SEC are much higher than these estimates, which are significantly lower.
The Securities and Exchange Commission (SEC) is considering imposing further measures to deter future violations, in addition to the waivers and civil penalties already imposed. The Securities and Exchange Commission has requested that Kwon be barred from serving as an officer or director of a securities company. Additionally, the Securities and Exchange Commission is seeking a “conduct-based injunction” to ensure that Terraform Labs and Kwon do not commit similar infringements in the future.
The importance of enforcement by the SEC is evidenced by the fact that the SEC has filed for relief and civil penalties against Terraform Labs and Do Kwon. This action demonstrates the regulator’s commitment to protecting investors and prosecuting those who violate securities laws. By ensuring that both people and companies are held accountable for their activities, the Securities and Exchange Commission (SEC) strives to preserve the integrity of the financial markets and encourage fair practices.
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