Terraform Labs: Bankruptcy filing helps appeal SEC securities fraud lawsuit
On January 31st, according to The Block's report, Terraform Labs stated in its recent filings that its bankruptcy protection will help it deal with the Securities and Exchange Commission's (SEC) securities fraud lawsuit. Terraform Labs filed for Chapter 11 bankruptcy protection on January 21st with the US Bankruptcy Court in Delaware, with assets and liabilities estimated to be between $100 million and $500 million.
The company's CEO, Chris Amani, stated that without bankruptcy protection, the company may not be able to meet potential massive compensation judgments and provide the necessary bonds for appeals. He further pointed out that if the SEC's charges are successfully appealed, it may reduce Terraform's liabilities and bring positive financial results to creditors and the community.
The SEC had accused the company and its former CEO Kwon Do-hyeong of securities fraud in February 2023, alleging that they planned "billions of dollars in cryptocurrency asset securities fraud" and raised billions of dollars from investors by "offering and selling a series of interrelated cryptocurrency asset securities."
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