Terraform Labs: Bankruptcy filing helps appeal lawsuit initiated by US SEC

Terraform Labs said its recent decision to file for bankruptcy will help it appeal a lawsuit filed by the U.S. SEC. The U.S. SEC filed a civil lawsuit against Terraform Labs and Do Kwon in February 2023, accusing the parties of orchestrating a "billion-dollar crypto-asset securities fraud" involving the UST and LUNA tokens. In December, a judge ruled that Terraform Labs and its founders violated U.S. law by failing to register the two cryptocurrencies. The case is set to go to trial in March on remaining fraud charges, but Terraform Labs said in bankruptcy court filings that the company may not be able to pay the undetermined amount of the judgment or appeal it. It is reported that an appeal against the U.S. SEC usually requires Terraform Labs to pay a "surrogate bond" equivalent to 110% of the total judgment amount before it can appeal. However, the company can appeal without posting a bond under Chapter 11 protections. Terraform Labs CEO Chris Amani revealed in court documents that the company owns approximately $28 million in Bitcoin, $7 million in other cryptocurrencies and $87 million in Luna tokens. Additionally, he said the company's upcoming appeal will argue that the SEC does not have the necessary authority to charge the company or its co-founder Do Kwon. He argued that Terraform Labs’ crypto-assets cannot be called securities and claimed that the case fell outside the SEC’s jurisdiction. (Reuters)