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Terraform Labs says its decision to file for bankruptcy will aid it in pursuing an appeal of the lawsuit it faces from the United States Securities and Exchange Commission.&nbsp;
In a Jan. 30 filing to a Delaware Bankruptcy Court, Terraform Labs CEO Chris Amani wrote that its Chapter 11 bankruptcy was critical to successfully appealing its case with the SEC. The firm — which created the now-defunct stablecoin TerraClassicUSD (USTC) — <a href="https://cointelegraph.com/news/do-kwon-terraform-labs-files-chapter-11-bankruptcy-protection">filed for bankruptcy on Jan. 21</a>. 
An appeal against the SEC would typically require Terraform Labs to front up a “supersedeas bond” of 110% of the total judgment before it could proceed. However, Chapter 11 bankruptcy protections could allow the firm to lodge an appeal without needing to post the bond. 
<blockquote data-ct-non-breakable="true">
 “A successful appeal would eliminate the single largest claim against the Debtor, thereby benefiting the Debtor, its creditors, and the community more broadly.” 
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<figure data-ct-non-breakable="true">
 <img src="https://s3.cointelegraph.com/uploads/2024-01/f458d3d6-1ae1-4d94-993b-141ada0e3c1c.png" alt="" title="">
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 Terraform Labs CEO says a Chapter 11 case is critical to appealing the SEC’s enforcement action. Source: PACER
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In the filing, Amani wrote that the firm’s upcoming appeal will argue the SEC doesn’t have the requisite authority to charge the firm or its co-founder Do Kwon. 
He argued Terraform Labs’ crypto assets cannot be called securities and claimed the case falls outside the SEC’s jurisdiction. 
Additionally, Amani claimed Terraform Labs’ treasury holds approximately $28 million in Bitcoin (<a href="https://cointelegraph.com/bitcoin-price">BTC</a>), $7 million of “various” other cryptocurrencies and roughly $87 million in Luna (<a href="https://cointelegraph.com/terra-price-index">LUNA</a>) tokens. 
Related: <a href="https://cointelegraph.com/news/coinbase-hearing-sec-arguments-highlight-court-lawsuit">Coinbase argues stocks, Terraform Labs and Howey in 5-hour SEC face-off</a>
The <a href="https://cointelegraph.com/news/do-kwon-removed-10k-bitcoin-from-terra-after-collapse-takeaways-from-sec-complaint">SEC filed civil charges against Terraform Labs</a> and Kwon in February 2023, accusing both of orchestrating a “multibillion-dollar crypto asset securities fraud” involving the token formerly known as UST and LUNA. 
The latest filing comes nearly two weeks after the SEC <a href="https://cointelegraph.com/news/sec-terraform-labs-trial-march">agreed to postpone Kwon’s upcoming fraud trial</a> to March 25 after receiving a request from his legal team to delay the proceedings. 
Kwon’s Terra Money ecosystem collapsed in May 2022. Shortly after the firm imploded, his whereabouts remained unknown until he was <a href="https://cointelegraph.com/news/do-kwon-extradition-montenegro">arrested in Montenegro in March 2023</a> after attempting to flee the country with falsified travel documents.
The U.S. and Kwon’s home country of South Korea are <a href="https://cointelegraph.com/news/us-and-south-korea-request-extradition-of-terra-co-founder-do-kwon">seeking his extradition</a>, with Kwon potentially <a href="https://cointelegraph.com/news/do-kwon-could-serve-prison-in-both-us-south-korea-prosecutor">subjected to several sentences in both countries</a>.
If Kwon is extradited to South Korea, he could <a href="https://cointelegraph.com/news/prosecutor-says-do-kwon-s-extradition-to-south-korea-would-best-serve-terraform-labs-victims-report">face a 40-year jail sentence</a> where he is alleged to have committed the majority of his crimes.
Big Questions: <a href="https://cointelegraph.com/magazine/big-questions-can-bitcoin-payments-make-a-comeback/">How can Bitcoin payments stage a comeback?</a>

Terraform Labs says bankruptcy will aid appeal of SEC suit

Cointelegraph

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