Terra Classic

TerraClassicUSD

<p>Singapore’s Terraform Labs, the company founded by incarcerated crypto entrepreneur Do Kwon, has filed for Chapter 11 bankruptcy protection as a mechanism to shield itself from potential severe penalties in the U.S. Securities and Exchange Commission’s (SEC) securities fraud lawsuit.</p><h2 id="header-0">Pursuing an appeal</h2><p>The <a href="https://document.epiq11.com/document/getdocumentbycode?docId&#61;4287484&amp;projectCode&#61;TEF" rel="noopener noreferrer nofollow">bankruptcy filing</a>, submitted on Tuesday in the U.S. Bankruptcy Court for the District of Delaware, aims to allow Terraform Labs to pursue an appeal against the SEC’s allegations. In the filing, Terraform Labs CEO Chris Amani emphasized the critical nature of the bankruptcy protection for the company’s ongoing operations, preservation of value for creditors, including the Terra community, and the pursuit of an appeal against the SEC enforcement action.</p><p>Amani expressed concerns that, without Chapter 11 protection, the company could face liquidation after the trial, forfeiting its right to appeal and leading to disastrous consequences for its business. Having acted as Terraform’s chief operating officer earlier in 2023, last July Amani was <a href="https://www.wsj.com/articles/jailed-crypto-tycoon-do-kwons-company-appoints-new-ceo-d58fa058?mod&#61;livecoverage_web" rel="noopener noreferrer nofollow">appointed</a> as the firm’s CEO.</p><h2 id="header-1">Protection afforded by Chapter 11</h2><p>The estimated assets and liabilities of Terraform Labs fall between $100 million and $500 million, as disclosed in the firm’s bankruptcy <a href="https://coinnesslive.page.link/sPE3YwTHYRJx9bGu9" rel="noopener noreferrer nofollow">filing</a> earlier this month. Amani highlighted the potential financial strain resulting from a substantial money judgment, indicating that the company might not be able to satisfy such a judgment or post the necessary supersedeas bond for an appeal, a bond that must be provided by a petitioner who attempts to have a judgment set aside, without the protection afforded by Chapter 11.</p><p>The SEC charged Terraform Labs and former CEO Do Kwon with securities fraud in February 2023, accusing them of orchestrating a “multi-billion dollar crypto asset securities fraud.” The Commission claimed the company raised billions from investors through unregistered transactions, offering an interconnected suite of crypto asset securities. Terraform Labs disputes the SEC’s summary judgment decision, asserting that the cryptocurrency tokens in question are not securities under the Acts and that the SEC’s jurisdiction is not applicable.</p><p>The potential consequences of liquidation extend beyond the company itself, impacting hundreds of thousands of Luna cryptocurrency holders, the same individuals the SEC purportedly seeks to protect. Luna operates on the Terra blockchain maintained by Terraform Labs.</p><p>Terraform Labs, known for the algorithmic stablecoin TerraUSD and its sister cryptocurrency Luna, filed for bankruptcy protection in the wake of the infamous collapse of both in May 2022.</p><p>The SEC’s case stems from that $40 billion collapse of TerraUSD and a previous version of Luna, accusing Terraform Labs and Kwon of misleading investors about the stability of TerraUSD.</p><p>Kwon was <a href="https://coinnesslive.page.link/9GBvErMgqbsnkjH67" rel="noopener noreferrer nofollow">arrested</a> in March of last year in Montenegro for using false documents. He is currently detained in Montenegro, following his attempt to travel to Dubai with a fake Costa Rican passport. The Terraform founder is currently awaiting extradition to either the United States or South Korea. Both Do Kwon and Terraform Labs deny committing fraud, with the SEC trial scheduled to commence in New York in late March.</p>

Terraform Labs claims bankruptcy protection will help SEC lawsuit appeal

Table of Contents

CoinNess Global

Other articles published on Feb 1, 2024

Expert Analyst Who Predicted Ethereum & Sui to Blow Up Tips Investing in Pushd!

German Banking Giant DZ Bank is Preparing to Launch Cryptocurrency Trading!

Algotech (ALGT) Offers Cheap Entry on Presale; Investors Consider the Coin a Better Alternative t...

3 no-brainer cryptocurrencies to buy in February

Jupiter’s Local Token JUP Experiences a Sharp Decline After Launch

Drake’s Bitcoin Loss in UFC Bet Revealed; Polkadot and Borroe Finance Show Positive Momentum

Join our free newsletter for daily crypto updates!