- US regulators want fiscal penalties greater than those levied on Binance.
- A civil jury found the Terra founder defrauded investors in $60bn collapse of DeFi project.
- His extradition to South Korea is imminent.
The US isn’t forgetting about Do Kwon.
The co-founder and onetime CEO of Terra may be on the verge of boarding a flight from Montenegro to his native South Korea to face fraud charges but Washington wants payback, too.
More specifically, the US Securities and Exchange Commission is seeking $5.3 billion in penalties from Kwon and Terraform Labs, the amalgamation of entities that collapsed in May 2022 and wiped out $60 billion in market value.
‘Lost everything’
On April 5, a US civil jury found Kwon defrauded Terra investors by misrepresenting the uses of its stablecoin, UST, and other offerings.
Now the SEC us seeking a penalty that would exceed the $4.3 billion Binance paid in 2023 after pleading guilty to violating US banking laws in connection with its failed anti-money laundering practices.
In court papers filed on April 19, the SEC laid out details of how much Kwon should pay as part of a fraud lawsuit the agency brought against him and Terraform last year.
While investors “lost everything,” Terraform Labs and Kwon made more than $4 billion from their “illegal conduct,” the SEC said in the filing.
The SEC is also calling for Kwon to be barred from ever serving as an officer or director of a public company. This is typical in cases involving allegations of investment fraud. Kwon has denied the allegations.
He could not be reached for comment on this article.
Private jet to Dubai
The SEC’s move reminds us that despite the criminal allegations lodged against Kwon by South Korean prosecutors and a US grand jury, the one-time DeFi billionaire is still facing civil complaints.
After hiding from South Korean authorities and Interpol for much of 2022, Kwon was arrested by Montenegro officials on March 23, 2023, while attempting to fly from Podgorica Airport to Dubai on a private jet.
He and an associate travelling with him, Han Chang-joon, were convicted of using false Costa Rican passports to try and leave the small Balkan nation.
In February, Han was extradited to South Korea. After months of hearings, Kwon was also ordered to return to South Korea rather than the US, where he has also been charged with fraud.
In the latest filing, the SEC is asking a court to order Kwon and Terraform labs to pay $4.2 billion from the profits generated from Terra’s stablecoin project.
The commission also wants more than $546 million in prejudgment interest and another combined $520 million.
Liam Kelly is a Berlin-based DL News’ correspondent. Contact him at liam@dlnews.com. Edward Robinson is the story editor at DL News. Contact him at ed@dlnews.com.
