Terra Fights Back Against SEC’s “Excessive” $5.3B Fine in Stablecoin Fraud Case

The post Terra Fights Back Against SEC’s “Excessive” $5.3B Fine in Stablecoin Fraud Case appeared first on Coinpedia Fintech News

The legal showdown of March 2024 continues even in May! Terraform Labs and its co-founder Do Kwon found themselves in hot water as a New York jury slapped them with fraud charges, with U.S. regulators seeking a whopping $5.3 billion penalty. Terraform’s legal team promptly fired back, arguing against the allegations, citing issues with jurisdiction and evidence, setting the stage for a tense confrontation.

Do we have a verdict or a conclusion yet? Far from it apparently. Here are the most recent updates.

Accusations & Denials

April 5 delivered a decisive blow as Terraform and Kwon were pronounced guilty of fraud following a rigorous two-week trial. The Securities and Exchange Commission (SEC) accused them of engaging in fraudulent activities, alleging over $4 billion in illicit gains from unregistered token sales, particularly involving LUNA and UST tokens.

A recent SEC filing shed light on Terraform’s algorithmic stablecoin, meant to mirror the US dollar, which suffered a catastrophic collapse in 2022, resulting in a staggering $40 billion loss in market value. This prompted the SEC to push for an unprecedented $5.3 billion fine, signaling heightened regulatory scrutiny within the crypto sphere.

Pushing Back Against the SEC

However, in a bold response submitted on Wednesday, May 1, Terraform’s legal team staunchly rejected the SEC’s demands, emphasizing that Kwon’s alleged misdeeds and token sales mostly took place outside U.S. borders, notably in Korea and Singapore, without causing significant losses within the U.S.

Terraform Labs previously suggested that a more modest fine of $1 million would be more appropriate, questioning the proportionality of the proposed penalty. Meanwhile, the ongoing legal dispute highlights the escalating tension between regulatory authorities and prominent players in the cryptocurrency sector.

Applauding the SEC

Gurbir Grewal, the director of the SEC’s Enforcement Division, applauded the verdict as a significant milestone, highlighting the agency’s commitment to safeguarding investors and maintaining market integrity.

Will the ultimate fine be in millions or billions? Tell us your prediction now.