Do Kwon Faces Extradition Battle, Pays Record $4.5B SEC Penalty
Crypto entrepreneur Do Kwon, the founder of Terraform Labs, faces a complex legal situation. Both Montenegro and South Korea have requested his extradition, with the final decision pending from the Ministry of Justice. Meanwhile, Kwon has been ordered to pay a substantial penalty for securities fraud.
Kwon's Terraform Labs has agreed to pay a $4.5 billion penalty to the US Securities and Exchange Commission (SEC). This includes $3.5 billion in restitution, over $460 million in interest, and $420 million in civil penalties. The total penalty is likely the highest for securities fraud in history.
Kwon was arrested in Montenegro and sentenced to four months in prison for forging an ID. The highest court in Montenegro has approved his extradition to both South Korea and the US. However, he is currently free on bail with restricted movement while awaiting the final ruling on his extradition.
Despite the penalty, Terraform Labs has only $150 million in assets left, according to a bankruptcy filing. The SEC considers the penalty as a way to ensure US investors get what's left, even if it's far less than the fine. Kwon personally has to pay around $200 million of the penalty. He and Terraform Labs are banned from buying or selling cryptocurrencies or tokens, including those from the Terra ecosystem.
The legal battle for Do Kwon continues as he awaits the final decision on his extradition. The substantial penalty imposed by the SEC, the highest for securities fraud in history, aims to compensate investors despite the limited assets remaining at Terraform Labs.
