You have a hinged wall, with the hinge point being between the bottom of the pony wall and top of the concrete wall. Terrible way for a contractor to have built. I have been called in several times where configurations like this have either started to tilt inwards or failed altogether. I can't see how a 2' strap on the exterior will do anything. Perhaps a sketch would help. Using an A23 clip, as you describe will do nothing.

You need to provide lateral restraint to the top of the concrete wall. We usually will install a line of horizontal wood strapping on the interior side along the top of the concrete wall. Then build a new wood stud wall on the interior side of the basement, tight to the strapping. You calculate the lateral load due to soil pressure on the concrete wall and use that value to design your stud wall. Anchorage of the stud wall to the basement slab-on-grade and anchorage to the floor framing above are the critical elements for this detail to work.

Thank you Canucks65, Pony wall is lateral restrained to top of wall with a 24" long metal strap, 8" embedded in concrete(at inside face of concrete wall) and taken to back up to the exterior sheathing outside and bottom plate of pony wall is fixed on top of wall with 2 sds screws at 24" on all the way. How to lateral restrain the joint between top of pony wall and bottom of the joist placed on pony wall as shown in picture.

Interesting. I have never thought about this scenario before. So basically, because you have the pony wall between the top of the concrete basement wall and the bottom of the floor joists, you have ended up with a cantilever basement wall instead of a simple span basement wall. First, I would say check the basement wall as a cantilever and see if works for strength and lateral deflection. I am not questioning Canuck65's solution, because I have not run the numbers, but I am a surprised that a wood stud wall built inside the concrete basement wall can adequately resist the lateral earth pressure, essentially replacing the concrete basement wall with a wood stud basement wall. How about installing diagonal wood kicker braces between the top of the concrete basement wall and the floor joists at each floor joist? Granted, it would not look good, but that may be the price you pay for building it wrong in the first place. If the basement is intended to be finished, you could slope the gyp ceiling at the kickers or box them out in a framed soffit.

I am not sure how a code compliant standard residential basement foundation wall could ever work as a cantilever. Typical code requirements would be an 8" thick (perhaps 10" thick) unreinforced concrete wall supported by a 20" x 6" strip footing. That's a long way from a typical cantilever wall.

The diagonal brace idea could work.

The interior stud framed wall is a common solution employed by many engineering firms in my area. One has the ability to modify the height of where the horizontal strapping is located (within reason) to balance out the shear and moment forces in the stud wall. Typical solution could be made to work with 2x6 @ 12" o/c or 2x8 @ 12" o.c. Connection details are important.

Canuck65, I wouldn't expect the concrete wall to work as a cantilever (especially if it was unreinforced with a 6" footing), but I would check it really quick just to rule it out. I trust you on the wood stud wall framed inside the concrete wall. I guess you apply the lateral loads to the framed wall as line loads based on the specific locations of the furring strips on the concrete wall? I'm glad to know of this as a possible solution, should I come across this scenario in the future. Thanks for sharing.

Try this: Anchor the bottom of a 4 inch WF firmly to the (future concrete) floor right at the bottom of the wall. Lay this column vertically against the wall 4 places along the wall, then anchor its top to the deck above. Bolt it to the beams above. You have reinforced the wall against collapsing inwards into the basement by passing the loads into the deck above and the floor below.

Where I lived at the time, a number of very expensive houses were damaged in the Loma Prieta earthquake. I remember some fell off their foundations because of a Pony Wall like this.

In retrospect, we all wondered how anything could be framed or engineered so poorly.... An obvious hinge at the location of highest shear demand in the structure.

I'd be very wary of this type of framing. The best analogy I can give might be for the attachment of a tilt up wall to it's roof diaphragm. You've got a deflection compatibility issue where the wall is pretty rigid, but the diaphragm is not. Hence, there is a real tendency for the diaphragm to pull away from the wall and collapse in.

I like the idea of "fixing" this by using wood strapping or wood kicker braces. But, I would want these connections to really anchor into the wall. I might want them to be continuous to the other side, or dropped off in a way like we do for sub-diaphragms and such.

Not talking about the concrete walls, I don't think there is any difference between this wall and cripple wall or pony wall in raised floor construction. As long as the floor diaphragm is braced properly by pony shear walls all sides (as I can see they are all sheathed), I won't lose my sleep over it.

Talking about the concrete walls, it's not a good practice to build concrete walls like this without wall anchors every 4'-0" o.c. to tie the floor/roof diaphragm to the top of the walls. However, if the thickness of the walls and their reinforcement are properly designed to resist out of plane seismic force (with 3 side supports being return walls and foundation), it should be ok. By the end of the day, if the movement of top of the wall is within limit, the floor framing won't fall down.

Looking at the picture, it looks like the wall is about 24 feet long and there appears to be a slight offset portion in the middle.
I agree with those who write that there are shortcomings with this design and construction but.... I think the wall MIGHT perform fine. Not saying it'll work by the numbers but based on my experience I think the wall will span horizontally for much of the width. I don't usually see too much bad behavior until a wall gets closer to 30 feet and even then, it usually needs to be a completely straight wall (no offsets).
Still, I don't like it and it's a good idea to do SOMETHING to help it out.

Regarding the existing metal strap - a few additional picture (showing that detail up close) would help.
Since the metal strap doesn't work (become engaged) much until there is some deflection of the wall, it might not be such a great detail. I don't see how an additional strap on the outside will do much as the "tension" is going to be on the inside. If I understand the OP correctly, the inside is where there already is a metal strap. I assume that is an attempt to make the 12" stud was act like a cantilever up off of the top of the concrete wall. Again, it seems like much deflection will have to happen before this metal strap and wood stud mechanism will start to work.
An "interior stud wall" with contact at the top of the concrete and anchored well top and bottom is good but also not as effective near the corners.
Steel wide flanges installed vertically are "fine" but it's tough to resist the the horizontal force at the top with wood framing. (more so with the joist framing parallel to the wall)

Looks like the soil height might not be too high so maybe that helps keep the load down some too.

It's curious that there is some much blocking in the framing that is parallel to the foundation wall. I like that idea but I wonder what the philosophy was for how the load from the concrete wall is going to get into that blocking. If it was the existing metal strap then I wonder why the question. (just curious about how the OP got here.