SEC Targets Terra Founder Do Kwon with Record $5.3 Billion Fine for Fraud

SEC seeks a record $5.3 billion fine against Terra founder Do Kwon for fraud

The U.S. Securities and Exchange Commission (SEC) is reportedly proposing a record $5.3 billion fine against Do Kwon, founder of the Terra ecosystem, following his recent fraud conviction. This fine could be the largest ever imposed in the cryptocurrency sector. According to Bloomberg, the SEC's action comes after a court determined that Kwon and Terraform Labs illegally profited nearly $4 billion by selling unregistered securities.

The suggested penalty includes a $4.2 billion disgorgement to confiscate these ill-gotten gains, plus $545 million in interest, alongside $420 million and $100 million in civil penalties for the company and Kwon respectively. Kwon's defense argues that the token sales did not occur within U.S. jurisdiction and, therefore, did not violate its laws.

Kwon's legal issues escalated following his arrest in Montenegro in 2023 for possessing a fake Costa Rican passport while trying to travel to the UAE. He is currently awaiting extradition to the U.S. and South Korea to face further charges related to Terra's $40 billion collapse.