Terraform Labs says bankruptcy will aid appeal of SEC suit

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Terraform Labs says its choice to file for chapter will help it in pursuing an enchantment of the lawsuit it faces from the USA Securities and Trade Fee. 

In a Jan. 30 submitting to a Delaware Chapter Court docket, Terraform Labs CEO Chris Amani wrote its Chapter 11 chapter was crucial to efficiently interesting its case with the SEC. The agency — which created the now-defunct stablecoin TerraClassicUSD (USTC) — filed for bankruptcy on Jan. 21.

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An enchantment in opposition to the SEC would sometimes require Terraform Labs to entrance up a “supersedeas bond” of 110% of the overall judgment earlier than it might proceed. Nevertheless, Chapter 11 chapter protections might enable the agency to lodge an enchantment with no need to submit the bond.

“A profitable enchantment would eradicate the only largest declare in opposition to the Debtor, thereby benefiting the Debtor, its collectors, and the group extra broadly.”

Terraform Labs CEO says a Chapter 11 case is crucial to interesting the SEC’s enforcement motion. Supply: PACER

Within the submitting, Amani wrote the agency’s upcoming enchantment will argue the SEC doesn’t have the requisite authority to cost the agency or its co-founder Do Kwon.

He argued Terraform Labs’ crypto belongings can’t be referred to as securities and claimed the case falls outdoors the SEC’s jurisdiction.

Moreover, Amani claimed Terraform Labs’ treasury holds roughly $28 million in Bitcoin (BTC), $7 million of “varied” different cryptocurrencies and roughly $87 million in Luna (LUNA) tokens.

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The SEC filed civil charges against Terraform Labs and Kwon in February final 12 months, accusing each of orchestrating a “multibillion-dollar crypto asset securities fraud” involving the tokens previously often known as UST and Terra (LUNA).

The newest submitting comes almost two weeks after the SEC agreed to postpone Kwon’s upcoming fraud trial to March 25 after receiving a request from his authorized group to delay the proceedings.

Kwon’s Terra Cash ecosystem collapsed in Could 2022. Shortly after the agency imploded his whereabouts remained unknown till he was arrested in Montenegro in March 2023 after trying to flee the nation with falsified journey paperwork.

The U.S. and Kwon’s dwelling nation South Korea are seeking his extradition, with Kwon doubtlessly subjected to several sentences in both countries.

If Kwon is extradited to South Korea, he might face a 40-year jail sentence the place he’s alleged to have dedicated the vast majority of his crimes.

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