Terraform Labs founder Do Kwon and his company are facing a lawsuit from the United States Securities and Exchange Commission (SEC). The SEC accused Terraform Labs of fraud related to the collapse of the USD 580 trillion UST stablecoin in 2022.
Found Guilty
A judge in New York found Terraform Labs guilty of the charges in April. As a result, the SEC demanded a huge fine, amounting to $5.3 billion (around Rp 77 trillion).
However, Terraform Labs' legal team did not remain silent. They filed a counterclaim on May 1. The crux of Terraform Labs' argument is that most of their token sales happen outside the United States.
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Terraform Labs Refutes SEC Lawsuits
In addition, Terraform Labs' legal team also denied SEC allegations that Do Kwon made "illegal" profits of $4 billion (around Rp 58 trillion) from the sale of LUNA and UST tokens. They argue that the SEC has not been able to prove a link between Terraform Labs' activities in the U.S. and investors' financial losses.
A similar response was also sent by Do Kwon's legal team. They stated that the SEC failed to prove that Do Kwon's decision at Terraform Labs would have a significant impact on the territory of the United States.
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Reasons Do Kwon cs
Furthermore, Do Kwon's legal team said that the activities in question by the SEC actually occurred outside the US, namely South Korea and Singapore.
Terraform Labs said the $5.4 billion fine demanded by the SEC was unfair. They proposed a much lower fine, which is only $1 million (about Rp 1.5 billion).
In response to Terraform Labs' arguments, Director of the SEC's Division of Law Enforcement, Gurbir Grewal, expressed his support for the court's decision. He also highlighted the huge losses suffered by investors due to Terraform Labs' actions.
Conclusion
The feud between Terraform Labs and the SEC is in the spotlight in the crypto world. The court's decision could set an important precedent and a warning to other crypto actors against fraudulent practices.
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