Terraform Labs Seeks Bankruptcy Protection to Appeal SEC Fraud Lawsuit

According to Foresight News, Terraform Labs has stated that its recent decision to file for bankruptcy will help it appeal the securities fraud lawsuit brought by the US Securities and Exchange Commission (SEC). In bankruptcy court documents, Terraform Labs said it might be unable to pay an undetermined judgment amount or proceed with an appeal. Typically, appealing against the US SEC requires Terraform Labs to pay an 'alternative bond' equivalent to 110% of the total judgment amount before proceeding with the appeal. However, under Chapter 11 bankruptcy protection, the company can file an appeal without paying the bond. The SEC filed a civil lawsuit against Terraform Labs and Do Kwon in February 2023, accusing them of orchestrating a 'multi-billion-dollar crypto asset securities fraud' involving UST and LUNA tokens. In December last year, a judge ruled that Terraform Labs and its founder had not registered these two cryptocurrencies, violating US law. The case will go to trial in March for the remaining fraud charges. Terraform Labs CEO Chris Amani revealed in court documents that the company holds approximately $28 million in Bitcoin, $7 million in other cryptocurrencies, and $87 million in Luna tokens. Furthermore, he stated that the company's upcoming appeal will argue that the US SEC does not have the necessary authority to charge the company or its co-founder Do Kwon. He believes that Terraform Labs' crypto assets cannot be considered securities and claims that the case is not within the SEC's jurisdiction.