The company’s legal team has submitted a motion in opposition to the $5.3B request.
A $1 million civil penalty, according to Terraform, would be “far more appropriate.”
In response to the SEC’s demand that Terraform Labs and its co-founder Do Kwon pay $5.3 billion in disgorgement and civil penalties, the company’s legal team has submitted a motion in opposition to the request.
After a jury found Terraform and Kwon guilty of fraud, their defense team requested a maximum civil penalty of $1 million in a filing made on April 26 in the U.S. District Court for the Southern District of New York.
Far More Appropriate Claim
The monies would essentially have to be collected from the Luna Foundation Guard (LFG), a “non-party” in the civil action, and Terraform contended that the court “should not grant any injunctive relief or disgorgement” because of this.
The filing stated:
“To pursue disgorgement from LFG, the SEC was required to name LFG as a defendant or relief defendant, which it did not do […] This statute bars an order against TFL [Terraform Labs] to disgorge LFG funds because TFL did not receive them. Those funds belong to LFG, not TFL, and the token sales from which they arose were conducted by LFG.”
A $1 million civil penalty, according to Terraform, would be “far more appropriate” than the multibillion-dollar plan put up by the SEC. Along with his opposition to the commission’s move, Kwon said in a separate filing that the suggested remedy—the disclosure of all of his financial accounts and assets—would infringe upon his Fifth Amendment right against self-incrimination. Following a two-week trial with the SEC, a jury convicted Terraform and Kwon guilty of investor fraud on April 5.