Terraform Labs’ Chapter 11 bankruptcy protection will allow the company to pursue its appeal of a securities fraud lawsuit from the U.S. Securities and Exchange Commission, the company said in a filing Tuesday.
“(Bankruptcy protection) is critical to the debtor’s ability to operate as a going concern and preserve value for creditors and stakeholders, including first parties. soil Luna
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community), providing an orderly process for resolving competing claims against them and pursuing appeals of SEC enforcement actions,” Terraform Labs CEO Chris Amani wrote. filing.
the company Chapter 11 Bankruptcy Filing It was filed Jan. 21 in the U.S. Bankruptcy Court for the District of Delaware, with estimated assets and liabilities between $100 million and $500 million. The first hearing on the bankruptcy petition is scheduled. wake up in the united states on wednesday
Amani said that due to the size of a potential money judgment, the company “will likely not be able to satisfy such judgment and will not be able to post the superseding bond required to appeal.”
“Without Chapter 11 protection, the debtor would have to liquidate after trial and final judgment,” he said. He also added that a successful appeal of the SEC’s claims will reduce Terraform’s debt and potentially lead to a positive financial outcome for Terraform. debtors, creditors and the community.
The SEC indicted the company and then-CEO Dohyung Kwon on securities fraud charges in February 2023, accusing the team of orchestrating a “multibillion-dollar cryptocurrency asset securities fraud” while also “offering and selling interconnected cryptocurrencies to defraud investors.” He said he had raised billions of dollars from . “Crypto-asset securities product family, many unregistered transactions.”
The current Terra CEO also reiterated the company’s claims of fraud from the SEC. “The Debtors disagree with the district court’s summary judgment decision and believe the SEC enforcement action should be reversed because the cryptocurrency tokens at issue are not securities under the Act and are outside the jurisdiction of the SEC,” Amani said in the filing. said in the document.
He was previously Judge Jed Rakoff of the U.S. District Court for the Southern District of New York. Agree with SEC argument Terra served the unregistered securities on summary judgment in December.
Terraform Labs is the company behind the algorithmic stablecoin TerraUSD and its sister cryptocurrency Luna, which infamously collapsed in May 2022. Former CEO Kwon was arrested in Montenegro in March last year on charges of attempting to travel with false documents. While the former Terra chief awaits extradition in his home country, the U.S. District Court for the Southern District of New York pushed back At Attorney Kwon’s request, the SEC will proceed with a trial against Terraform and Chairman Kwon until the end of March.
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