Terraform Labs: Bankruptcy filing helps appeal SEC securities fraud lawsuit

BlockBeats news, on January 31, according to The Block, Terraform Labs stated in its recent filing that the company’s bankruptcy protection will help it respond to securities fraud lawsuits from the U.S. Securities and Exchange Commission (SEC). Terraform Labs filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Delaware on Jan. 21, with assets and liabilities estimated at $100 million to $500 million. CEO Chris Amani said that given the potential for large damages judgments, without bankruptcy protection, the company may not be able to satisfy such judgments or provide the bond required to appeal. He further noted that a successful appeal of the SEC's charges could reduce Terraform's liabilities and result in a positive financial outcome for creditors and the community. The SEC had charged the company and its former CEO Kwon Do-hyeong with securities fraud in February 2023, saying it orchestrated a "billion-dollar crypto asset securities fraud" by "offering and selling a series of interconnected crypto assets." Asset Securities” raised billions of dollars from investors.