The SEC hits crypto firm TerraForm with a $4.5 billion penalty—but no one is going to pay it

Gary Gensler is at it again. The Securities and Exchange Commission has asked a federal judge to approve a settlement requiring TerraForm and its co-founder Do Kwon to pay $4.47 billion to resolve civil charges related to the collapse of the fraudulent UST stablecoin. In a letter to the court, the SEC declares: “Adoption of this decision will ensure the maximum return of funds to the injured investors and will completely bankrupt TerraForm.”

Sounds great, but first thing: TerraForm is bankrupt and has little to no money; On the other hand, it is not clear whether Kwon’s debt is close to $ 204 million or whether he will even come here again. The latest reports have him locked up in a Balkan prison, waiting to learn whether he will be extradited to the United States or to Kwon’s native South Korea, where he robbed many of its citizens. Good luck to the SEC as they collect everything.

An unusually shoddy report from Bloomberg states that TerraForm “will pay $4.47 billion,” but the truth is, as the Wall Street Journal puts it, “The regulator may only receive a fraction (if any) of the penalty.” Yet Gensler’s SEC is singing and dancing in court, planning to issue a press release touting the billions of dollars TerraForm will “pay out.”

This is quite a rich case, considering that Do Kwon’s fraud occurred on Gensler’s watch and the SEC failed to stop it. Meanwhile, the $4.5 billion deal should come as cold comfort to investors burned by TerraForm’s collapse. To them, it must be like having the police stand by while your house is burglarized, and after your belongings are gone and your proceeds have been spent, announcing that the thief must pay a large sum of money that you will never receive.

What exactly is the point of all this? Presumably this is to give Gensler another striking headline to celebrate his failed war against the crypto industry. Imagine if the SEC chairman devoted that kind of energy to creating a viable digital asset regime instead.

Jeff John Roberts
[email protected]
@jeffjohnroberts

This story first appeared on Fortune.com