Terraform Labs is dissatisfied with the SEC's $5.3 billion sky-high fine: LUNA issuance and sales are not in the United States

This site (120BtC.coM): After the sudden collapse of LUNA and UST in 2022, the U.S. Securities and Exchange Commission (SEC) launched an investigation into Terraform Labs and its founders in February last year. Do Kwon filed a civil lawsuit, in which the SEC said Terraform's collapse in 2022 cost investors $40 billion.

Last month, a New York federal jury found Do Kwon and Terraform Labs guilty of fraud.

A sky-high fine of US$5.3 billion

After winning the civil lawsuit, the SEC then submitted a motion to the Southern District Court of New York, requiring Do Kwon and Terraform Labs to pay a sky-high fine of approximately US$5.3 billion. According to the document, Kwon and Terraform made more than $4 billion in "illegal gains" through unregistered token sales such as LUNA and UST.

The proposed penalties include a disgorgement penalty of $4.2 billion and prejudgment interest of $545 million, as well as civil penalties against Terraform's Do Kwon of $420 million and $100 million, respectively.

If this fine is established, it will exceed the $4.3 billion fine Binance settled with the U.S. Department of Justice (DOJ) in November 2023.

Lawyers submit documents: Token issuance and sales are almost all outside the United States

On the other hand, Terraform’s lawyers argued in a document filed on Wednesday (1):Terraform’s token issuance Nearly all of the sales occurred outside the United States, and the SEC provided no indication that Terraform and Kwon's limited U.S. operations directly contributed to the losses, let alone the billions of dollars the SEC sought to forfeit.

Interestingly, when Do Kwon was found guilty of fraud by a New York jury last month, he also told the judge that they should not pay the $5.3 billion fine sought by U.S. regulators because most of the company of stablecoins are sold overseas.

SEC cited the Washington Park sign as evidence of Terraform’s entry into the United States

As for the SEC, in a report submitted at the end of April, it stated: “Terraform very much wants to integrate into American society, so it paid more than $38 million. Displaying its logo on a baseball field in the nation's capital, America's favorite pastime."

On the other hand, it is reported that Terraform Labs signed a cooperation agreement with the American Baseball Team in February 2022, and the SEC used this as evidence of Terraform’s entry into the United States.

However, Terraform’s lawyers countered that because Terraform purchased very few domestic quantities, the evidence of “displaying its logo at the baseball stadium in Washington Park” did not have a substantial impact within the United States. .

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