Representatives for Terraform Labs have submitted a legal motion opposing the SEC's request for $5.3 billion in penalties and disgorgement in a recent court case. The firm's legal team argued that the court should only impose a $1 million civil penalty, as charging them with a larger amount would require taking funds from the Luna Foundation Guard (LFG), which is not directly involved in the case.
In addition, Terraform stated that any funding related to LFG should not be targeted as it is separate from them, and these funds resulted from transactions conducted by LFG, not Terraform Labs. They believe that the $1 million penalty would be more suitable compared to the SEC's substantial penalty proposal. Terraform's co-founder, Do Kwon, also opposed the SEC's motion, claiming that disclosing his account details would violate his Fifth Amendment rights.
Recently, Terraform and Kwon were found guilty of defrauding investors in a trial with the SEC. Kwon was not present during the trial due to travel restrictions in Montenegro, where he was arrested earlier. Local authorities are currently handling extradition requests from both U.S. and South Korean authorities.
