Case 1:23-cv-01346-JSR Document 237 Filed 04/19/24 Page 1 of 5

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORKSECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,v.
TERRAFORM LABS PTE. LTD. and DO
HYEONG KWON,

Civil Action No. 23-cv-1346 (JSR)

Hon. Jed S. Rakoff

Defendants.

DEFENDANT DO HYEONG KWON’S MEMORANDUM OF LAWREGARDING POTENTIAL REMEDIESCase 1:23-cv-01346-JSR Document 237 Filed 04/19/24 Page 2 of 5

TABLE OF AUTHORITIESCases
SEC v. Cavanagh,
155 F.3d 129 (2d Cir. 1998)................................................................................................... 1
SEC v. Govil,
86 F. 4th 89 (2d Cir. 2023) .................................................................................................... 1Regulations
89 Fed. Reg. 1970 (Jan. 11, 2024) .................................................................................................. 1ii

Case 1:23-cv-01346-JSR Document 237 Filed 04/19/24 Page 3 of 5

Defendant Do Hyeong Kwon joins in the legal and factual arguments set forth in theMemorandum of Law Regarding Potential Remedies submitted by Defendant Terraform Labs PteLtd. (“TFL”) and writes separately to address potential remedies specific to him.
Injunctive Relief. Injunctive relief is not warranted against Mr. Kwon because the SEC
cannot show that there is a real likelihood that Mr. Kwon will repeat the alleged conduct. See SEC
v. Cavanagh, 155 F.3d 129, 135 (2d Cir. 1998). Mr. Kwon is no longer CEO of TFL nor is heemployed by any “crypto-asset security” company. Although Mr. Kwon holds shares in TFL, TFL
is currently in bankruptcy and pursuing business plans that do not involve the offer or sale of“crypto-asset securities.” In addition, the criminal charges pending against him make it unlikely
he will be “in a position where future violations could be anticipated.” Cavanagh, 155 F.3d at 135.
To the extent the Court determines that the SEC has met its burden of proof to justify injunctive
relief, the scope of the injunction, including any officer or director bar, should be limited to conduct
and positions in the United States.
Disgorgement. Disgorgement is not proper against Mr. Kwon. Assuming the SEC manages
to find a “victim” in the U.S. who has suffered “pecuniary harm,” SEC v. Govil, 86 F. 4th 89, 94(2d Cir. 2023), there is no evidence that Mr. Kwon received any ill-gotten gains separate fromwhat TFL received. As such, there are no illegal profits for Mr. Kwon to disgorge.
Civil Penalties. With respect to potential penalties, using the structure laid out in TFL’s
brief, and using tier-one and tier-two per-violation amounts of $11,524 and $115,231 respectively,
see 89 Fed. Reg. 1970 (Jan. 11, 2024), the corresponding potential penalties against Mr. Kwon
would be $230,480 (based on the number of violative transactions under tier one), $253,510 (basedon the number of statutory violations under tier one for the registration claims and tier two for the1Case 1:23-cv-01346-JSR Document 237 Filed 04/19/24 Page 4 of 5

fraud claims), and $345,270 (based on the number of months of violative conduct under tier one).
Because there is no evidence that Mr. Kwon received pecuniary gain separate from what TFL
received, that maximum civil penalty is determined by the per-violation amounts.
Conclusion
For the foregoing reasons, the Court should not grant injunctive relief or disgorgement
against Mr. Kwon, and may assess appropriate civil penalties based on the criteria discussed above
and in TFL’s remedies brief to the extent the SEC meets its burden of proof.

Date: April 19, 2024

Respectfully submitted,/s/ David Patton
KAPLAN HECKER & FINK LLPDavid Patton
Michael Ferrara
Sean Hecker
Andrew Chesley
Christopher Morel
350 Fifth Avenue, 63rd Floor
New York, New York 10118
Tel: (212) 763-0883
dpatton@kaplanhecker.com
mferrara@kaplanhecker.com
shecker@kaplanhecker.com
achesley@kaplanhecker.com
cmorel@kaplanhecker.com
Counsel for Defendant Do Hyeong Kwon

2

Case 1:23-cv-01346-JSR Document 237 Filed 04/19/24 Page 5 of 5

CERTIFICATE OF SERVICE
I, David Patton, certify that I caused a true and correct copy of the foregoing to be servedon all counsel of record via the Court’s ECF system on April 19, 2024.
/s/ David Patton
David Patton