Terraform claims the SEC did not provide ‘any evidence’ to disburse $4.7B

The United States Securities and Exchange Commission (SEC) was scheduled to hear the remedies against Terraform Labs (TFL) and co-founder Do Kwon on May 22, and the crypto company argued for a different ruling than planned. by the controller.

In a supplement to Terraform's objection to the SEC's final ruling filed on May 1, lawyers representing the crypto firm argued that the financial regulator was not entitled to $5.3 billion in disgorgement, interest and civil penalties. . Terraform claims that any eviction based on its previously asserted claim must be effectively obtained from Luna Foundation Gardner (LFG) as a “non-party” to the civil case.

According to Terraform's lawyers, the SEC had no evidence that the platform's or Quon's activities in the United States had caused losses in the civil case. According to Terraform, the commission will grant the regulator an “unlimited injunction” if it seeks a civil penalty.

“TFL's offers and token sales took place entirely outside of the US. […] And the SEC has provided no evidence that the defendants' limitations directly caused any losses in the U.S., which the SEC seeks to disgorge in the billions,” the May 1 filing said.

Related: Do Kwon's Terraform Labs Files for Chapter 11 Bankruptcy Protection

In an April 26 filing, Terraform said the $1 million in civil penalties is “more appropriate” than the SEC's multibillion-dollar proposal. Kwon, who is currently awaiting extradition in Montenegro to either the United States or South Korea, challenged the SEC's settlement of the civil case on the same grounds as Terraform.

“[T]He said the SEC must prove that Mr. Kuhn is still engaged in the United States or has a “foreseeable substantial effect” in the United States outside the United States, lawyers for the Terraform co-founder said. “Kwon's role in the conduct underlying the SEC's requested judgment for Mr. Kwon was performed entirely overseas in Korea and Singapore.

After a two-week trial with the SEC, a jury found Terraform and Kwon guilty of defrauding investors. All parties are scheduled to present arguments on the proposed settlement before Judge Jed Rakoff on May 22. However, it was unclear at press time whether Kwon would be unable to attend due to his legal status in Montenegro.

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