On the 23rd (local time), the SEC recently asked a New York court to fine Kwon Do-hyung and Terraform Labs $5.3 billion for holding them responsible for the “Tera·Luna” crash. A jury in the Southern Federal Court of New York concluded on the 5th that Kwon Do-hyung and Terraform Labs misled investors related to the stability of TerraUSD (UST) and acknowledged civil liability for damages against them.
In the final ruling application submitted to the court on the 19th, the SEC demanded $4.7 billion in fines and $520 million in civil penalties for Kwon Do-hyung and Terraform Labs. In a document submitted along with the final ruling application, the SEC explained the background of the fines, saying, “Kwon Do-hyung and Terraform Labs would have earned more than $4 billion in unfair profits from illegal activities and would have earned much more.”
Terraform Labs sold $65.2 million of Luna and $4.3 million of Mir to institutional investors, according to court data from New York. In addition, Luna and UST through Luna Foundation Guard (LFG) have a total sales of $1.8 billion. Investors purchased $2.3 billion of UST through several cryptocurrency exchanges between June 2021 and May 2022.
In addition to imposing fines, the SEC requested that Kwon Do-hyung be prohibited from serving as executives and directors of listed companies and that Terraform Labs bans the sale of cryptographic asset securities. The SEC said, “The defendants did not show remorse for their actions. Not only is it possible to commit additional violations, but they could also be in a position to commit violations,” adding, “These measures are necessary to prevent further violations.”
While the U.S. authorities are demanding intense punishment for Kwon Do-hyung and Terraform Labs, Kwon Do-hyung’s side is focusing on being repatriated from Montenegro to Korea.
According to the local daily Bijesty on the 23rd, legal representatives of Kwon Do-hyung in Montenegro appealed against the decision of the Ford Gorica High Court that granted him extradition to Korea and the United States. “The decision of the High Court is unfounded and illegal,” they said in the appeal, adding that “the High Court and the Supreme Court misinterpreted the law to meet the demands of the Minister of Justice.” The High Court and the Supreme Court made rulings tailored to the position of Montenegro Justice Minister Andrej Milovich.
Minister Milovich will make a final decision on where Kwon Do-hyung will be repatriated, said the court has re-approved the extradition of Kwon Do-hyung because the extradition requirements to South Korea and the United States have been met. In a local broadcast interview in November last year, Secretary Milovich said, “The United States is our most important foreign policy partner,” expressing his desire for Kwon Do-hyung to go to the United States.
Kwon Do-hyung’s side particularly criticized the Supreme Court’s ruling in the appeal. This is because the Supreme Court’s ruling overturned Kwon Do-hyung’s repatriation to Korea, which was previously decided by the High Court and confirmed by the Court of Appeals. The Montenegro Supreme Court invalidated Kwon’s decision to repatriate him to Korea on the 5th and returned the case to the Ford Gorica High Court, which was the original court.
The Supreme Court said in its ruling at the time, “The permission and priority of the extradition should be made by the competent minister, not the court,” adding, “The court’s duty is to determine whether the extradition requirements for the accused are met.” As a result, the Ford Gorica High Court repeated the existing procedure to grant extradition of Kwon Do-hyung and handed over the final decision to Secretary Milovic.
Kwon, who is currently indicted in both the U.S. and South Korea, was arrested in Montenegro in March last year for possessing a fake passport after 11 months of fleeing. Kwon was sentenced to four months in prison by a local court and was released from prison on April 23 before being transferred to a foreign prison camp.
Kwon wants to be summoned to a country where his punishment is likely to be applied relatively weakly rather than a country that will cause great damage to others and where his punishment is likely to be applied strongly. If you do something wrong, you will have to be punished accordingly. Instead of showing it to the media, whether it is a U.S. court or a Korean court, you should give reasonable punishment to Kwon.
EJ SONG
US ASIA JOURNAL
