After Terraform Labs and Do Kwon were found guilty of fraud by a jury, a judge set a hearing for May 22 to determine penalties. The court will listen to arguments regarding why the SEC is seeking nearly $5.3 billion in fines while Terraform’s legal team is advocating for just $1 million.
Terraform’s legal team is pushing for a much lower penalty. Judge Jed Rakoff instructed the SEC, Kwon, and Terraform to appear in court on May 22 to discuss potential remedies following the jury’s verdict. This ruling also permits adjustments to previous penalty requests. The next step in the legal process is underway!
Court Orders Remedies Discussion in Terraform Labs Case
Following a recent court order, both parties involved will convene to discuss proposed remedies, with financial implications ranging from millions to billions of dollars. This highlights the significant financial stakes at play in the case.
The SEC has recommended disgorgement and prejudgment interest amounting to a substantial $4.7 billion, accompanied by civil penalties totaling $520 million. In contrast, Terraform’s proposal seeks a nominal $1 million civil penalty without disgorgement.
Reports suggest that the SEC possesses ample evidence to convincingly argue that Terraform Labs misled investors about the stability of its cryptocurrency coin. Additionally, it is alleged that Terraform failed to acknowledge other companies’ efforts to sustain the cryptocurrency market. In early April, a Manhattan jury sided with the SEC, concurring that Terraform had deceived investors about its coins under Kwon鈥檚 leadership.
As the case progresses to the remedies stage, both parties have been granted extensions until May 6 and May 1, respectively, to submit additional filings supporting their proposed remedies.
Do Kwon’s Attendance and Terraform Labs’ Financial Woes
As the upcoming meeting approaches, uncertainty looms over Do Kwon’s potential attendance. Kwon, who is currently in Montenegro, faces extradition requests from both the US and South Korea, pending review. His inability to attend the trial in person stems from his 2023 arrest in Montenegro for using fake travel documents. Consequently, it remains unclear whether he will be present in court on May 22.
Meanwhile, Terraform Labs’ financial challenges have been exacerbated by ongoing bankruptcy proceedings initiated with the filing for Chapter 11 protection in January. The company’s financial status, with estimated liabilities and assets ranging from $100 million to $500 million, underscores the severity of the situation.
At the same time, the impending hearing on proposed remedies marks a crucial turning point in the legal battle involving Terraform Labs, Do Kwon, and the SEC. The outcome holds significant implications for market stability and investor confidence in crypto assets.
Important:聽Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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