A significant conflict is arising in the crypto legal realm. The US Securities and Exchange Commission (SEC) has imposed a substantial $5.3 billion penalty on Terraform Labs and Do Kwon for disgorgement and civil penalties. Nevertheless, Terraform’s legal representatives argue that this amount is unreasonable and propose a maximum civil penalty of $1 million. They contend that requiring disgorgement from Terraform would involve funds held by the Luna Foundation Guard (LFG), which is not directly linked to the SEC’s civil case.

In reaction to the SEC's motion for a $5.3 billion penalty, Terraform’s legal team filed a motion opposing the suggested penalties last week. They claim that the court should not grant injunctive relief or disgorgement, and any penalties should be capped at a $1 million civil penalty. Moreover, Do Kwon's legal team is against the proposed measure of disclosing full details of his accounts and assets, citing his Fifth Amendment rights against self-incrimination.

During the legal proceedings, Do Kwon was not present due to travel restrictions after being arrested in Montenegro in March 2023 for using falsified travel documents. Although Montenegro’s Supreme Court has halted the extradition decision to South Korea, there is a chance he might face trial in New York instead.

Terraform and Ripple: Challenges Against SEC's Enforcement

Terraform and Ripple are currently entangled with the SEC over alleged infringements. In February 2023, the SEC accused Terraform and Kwon of violations related to the algorithmic stablecoin Terra USD (UST). After a two-week trial in April, a jury found them guilty of deceiving investors. However, Judge Jed Rakoff has not yet decided on the proposed remedies.

Conversely, Ripple pushed back against the regulator's proposed $2 billion fine last month. Ripple's CEO, Brad Garlinghouse, criticized the SEC's demands, mentioning the absence of prior instances for such a substantial penalty.

Major players confronting the SEC regarding crypto fines! Will they yield or will the SEC emerge victorious? Stay tuned for updates!