SEC Disputes Terraform’s Fraud Claims Outside US
Lawyers representing the United States Securities and Exchange Commission (SEC) have responded to Terraform Labs’ suggested remedies following a verdict in a civil case. The SEC has opposed Terraform’s argument for reduced disgorgement in the judgment, asserting that the company did not present a proper case in court regarding the extraterritorial application of federal laws concerning token offerings. The SEC’s filing argues that even if Terraform’s legal basis was accepted, there are various activities within the United States that could be used to enforce securities laws. Terraform’s former communications head, based in California, allegedly played a “secret role” in restoring the TerraUSD (UST) token’s dollar peg. The SEC plans to seek $3.6 billion in disgorgement from Terraform and its co-founder, Do Kwon, as well as $1.7 billion in “ill-gotten gains.”
In response to the SEC’s proposed judgment, Terraform suggested a $1 million civil penalty without disgorgement. A jury found Terraform and Kwon liable for fraud in April following a two-week trial. All parties involved in the civil lawsuit are scheduled to appear in court on May 22, where Judge Jed Rakoff will consider the proposed remedies. Kwon, who could not attend the trial in person due to legal issues in Montenegro, had previously been arrested and sentenced to four months in prison in 2023 for using falsified travel documents. While extradition requests from the U.S. and South Korea are being considered, Kwon remains in Montenegro.
The SEC’s response emphasizes that Terraform and Kwon’s arguments lack merit and misapply the law while misstating relevant facts. The SEC also highlights how Terraform failed to acknowledge the involvement of U.S. company Jump in restoring the dollar peg of TerraUSD and the misleading tweets posted by Terraform’s former communications head in California. The SEC’s filing suggests that Terraform engaged in deceptive practices by giving credit to its algorithm for UST’s recovery and that Kwon promoted UST during a conference in New York and through media outlets targeting a U.S. audience.
The SEC’s intention to seek $3.6 billion in disgorgement from Terraform and Kwon, as well as $1.7 billion in ill-gotten gains, demonstrates the seriousness of the alleged violations. Terraform’s proposed remedy of a $1 million civil penalty without disgorgement appears significantly lower in comparison. The final decision on remedies lies with Judge Jed Rakoff, who will evaluate the arguments presented by both parties.
This ongoing civil case highlights the jurisdictional challenges and complexities faced by regulatory authorities when dealing with global digital asset offerings. The SEC’s argument regarding the application of federal laws beyond U.S. borders underscores their determination to enforce securities regulations and protect investors. Going forward, the outcome of this case may have implications for the regulation of digital currencies and the legal boundaries surrounding their issuance and sale.
20 thoughts on “SEC Disputes Terraform’s Fraud Claims Outside US”
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This article underscores the complexities faced by regulatory authorities when dealing with global digital asset offerings. It’s crucial to strike a balance between innovation and investor protection. 🌍🔍⚖️
The SEC’s insistence on enforcing federal laws beyond U.S. borders is an infringement on sovereignty. They have no right to intervene. 🗽
Looking forward to Judge Jed Rakoff’s decision on the proposed remedies. It will be interesting to see how he reviews the arguments from both sides.
Judge Jed Rakoff should carefully consider Terraform’s proposed remedies and not just favor the SEC’s demands.
Shutting down deceptive practices and enforcing securities regulations is crucial in protecting investors. The SEC’s strong stance sets a precedent for future cases involving digital currencies.
The SEC’s determination to enforce securities regulations is nothing more than a power play. They’re just flexing their muscles.
It’s reassuring to see the SEC emphasizing their commitment to enforce securities regulations beyond national borders. Protecting investors in an evolving digital asset landscape is paramount. 💼🔒
The amounts the SEC is seeking in disgorgement and ill-gotten gains are staggering! It shows the severity of the alleged violations and their determination to hold Terraform accountable.
It’s clear that Terraform engaged in deceptive practices. They should pay the price for their actions.
This article showcases the challenges faced by regulatory authorities in dealing with global digital asset offerings. It’s crucial to establish clear legal boundaries to ensure investor protection and market integrity.
It’s intriguing to see the jurisdictional challenges faced by regulatory authorities in cases like this. Dealing with global digital asset offerings definitely presents various complexities.
This case sets a dangerous precedent for the regulation of digital currencies. It’s an attack on financial innovation. 💔
Terraform’s proposed remedy is too lenient considering the severity of the allegations. They should face stricter penalties!
The SEC’s argument for the extraterritorial application of federal laws highlights their determination to protect investors and maintain the integrity of the financial system. This case will have implications for the future of digital asset regulation. 💼⚖️
I appreciate the SEC’s efforts to enforce securities regulations and bring integrity to the digital asset space. The outcome of this case will undoubtedly shape the future of regulation in this evolving industry.
This article provides valuable insights into the current civil case against Terraform Labs. I appreciate the comprehensive coverage of the SEC’s response and Terraform’s suggested remedies.
Terraform’s proposed $1 million civil penalty without disgorgement seems quite lenient compared to the SEC’s demands. The decision on remedies will have significant implications for the company and its co-founder. ⚖️💸
Terraform’s former communications head being labeled as playing a “secret role” is ludicrous. Can’t the SEC find anything substantial? 🙄
Regulatory authorities like the SEC play a crucial role in protecting investors and ensuring the integrity of the financial markets. These jurisdictional challenges underline the importance of their work. 💼🔒🌐
This case highlights the need for regulation and enforcement in the digital asset space. Jurisdictional challenges are complex, but the SEC’s commitment to protect investors is commendable. 💪🌐💼