New York Jury in March 2024, terraformed He had filed fraud charges against Labs and its co-founder Do Kwon. US regulators attracted attention by demanding fines of $ 5.3 billion. However, lawyers representing the bankrupt company denied these allegations, stating that the firm sold most of its UST stablecoins outside the United States.
Terraform Lawyers Deny SEC Accusations
On April 5, Terraform and Do Kwon He is found guilty of fraud after a two-week trial. Following this, the SEC pushed for the largest fine in crypto industry history if implemented, reflecting increased regulatory scrutiny from US authorities. In a recent filing, the SEC emphasized that the court needs to send a clear message that it will not tolerate such blatant abuses.
The SEC accused Terraform and Kwon of gaining over $4 billion in “unfair profits” through unregistered token sales that included LUNA and UST. Terraform’s algorithmic stablecoin UST, which aims to maintain parity with the US dollar, collapsed in 2022, resulting in a staggering $40 billion loss in market value.
But Terraform’s lawyers said in a filing Wednesday, May 1, that most of the token sales occurred outside the U.S. and that the SEC has no evidence linking Terraform and Kwon’s limited U.S. operations to any significant losses, let alone the billions sought in damages by the SEC. They claimed that they could not offer it.
Kwon’s legal team argued in a separate filing on Wednesday that the SEC failed to show that Kwon’s participation in Terraform would have a significant and foreseeable impact in the United States:
“Do Kwon’s role in the conduct that formed the basis of the SEC’s requested decision occurred entirely abroad, in Korea and Singapore.”
Last week, Terraform Labs filed a filing saying the SEC’s $5.4 billion demand was unfair. At the time, Terraform Lawyers said a $1 million fine would be more appropriate.
