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Terraform Labs hasn't warmed to the idea of paying $5.3 billion in penalties to the United States Securities and Exchange Commission (SEC).
Earlier this month, the US regulator requested $4.7 billion from Terraform Labs and Do Kwon's disgorgement and prejudgment interest. Additional civil penalties of $420 million and $100 million respectively were being sought respectively.
The SEC also requested a ban on Do Kwon from serving as an officer or director of a securities issuer and demanded that the LUNA founder must provide details of all his accounts and assets.
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At the time, legal representatives for Terraform Labs and Do Kwon filed briefs for a maximum civil penalty from Terraform Labs of $3.5 million and $800,000 from Do Kwon.
In an April 26 filing in U.S. District Court for the Southern District of New York, Terraform Lab's legal team instead suggested a maximum penalty of $1 million, stating the figure is “far more appropriate” than the SEC’s $5.3 billion.
The firm also argued that that the court “should not grant any injunctive relief or disgorgement” as the funds would have to be obtained from the Luna Foundation Guard (LFG).
“To pursue disgorgement from LFG, the SEC was required to name LFG as a defendant or relief defendant, which it did not do [...] This statute bars an order against TFL [Terraform Labs] to disgorge LFG funds because TFL did not receive them,” said the filing. “Those funds belong to LFG, not TFL, and the token sales from which they arose were conducted by LFG.”
Terraform Labs isn't the only firm offering counter-offers to the SEC's penalties. In its latest exchange with the regulator, Ripple filed a rebuttal to the SEC's $2 billion fine proposal.
Last month, the SEC said Ripple should pay $2 billion in fines for selling XRP to institutional investors. Ripple CEO Brad Garlinghouse said at the time that there was "absolutely no precedent" for the SEC's demands.
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Ripple has since argued that the penalty should be closer to $10 million. "Our opposition to the SEC’s request for $2B in penalties for legacy institutional sales is now public," said Ripple Chief Legal Office Stuart Alderoty on Monday.
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Earlier this month, Montenegro’s Supreme Court suspended the decision made by lower-level judges to extradite Do Kwon to South Korea. Instead, Do Kwon could end up on trial in New York.
Do Kwon and his team had pushed for extradition to South Korea as sentences for white-collar crimes are less harsh than Montenegro seems fit. Therefore the government intends to approve extradition to the US instead.
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