The General Manager of #Terraform Labs, Chris Amani, believes that declaring bankruptcy protection can provide the company with a better stance in appealing against charges by the Securities and Exchange Commission (SEC), potentially leading to the dismissal of the "most significant charge" against the company.
According to Terraform Labs, filing for bankruptcy could play a crucial role in the appeal process against the legal dispute with the #SEC . Chris Amani, the CEO of the company, stated in a document submitted on January 30th to the bankruptcy court in Delaware that Chapter 11 bankruptcy is essential for success in the appeal against the SEC. The company, which was behind the now-defunct stablecoin TerraClassicUSD (USTC), declared bankruptcy on January 21st.
Normally, the company would have to post a supersedeas bond amounting to 110% of the total judgment for an appeal against the SEC. However, Chapter 11 bankruptcy protection could allow Terraform Labs to proceed with the appeal without having to disclose this bond.
"A successful appeal would eliminate the largest single claim against the debtor, benefiting not only the debtor but also its creditors and the broader community," Amani mentioned in his filing.
Amani further argues that in the upcoming appeal, he will contend that the SEC does not have the authority to apply charges against the company or its co-founder Do Kwon, as the #cryptocurrencies managed by Terraform Labs cannot be considered securities and thus do not fall under the SEC's jurisdiction.
In February 2023, the SEC filed a civil lawsuit against Terraform Labs and Kwon, accusing them of conducting a "multi-billion dollar #crypto asset fraud" related to tokens previously known as UST and LUNA.
This latest filing came almost two weeks after the SEC agreed to postpone the upcoming court trial with Kwon to March 25th, following a request from his legal team for a delay.
After the Terra Money ecosystem collapsed in May 2022, Kwon's whereabouts remained unknown until his arrest in March 2023 in Montenegro, when he attempted to flee the country with forged travel documents.
The United States and Kwon's home country, South Korea, are seeking his extradition, where Kwon could face prosecution in both countries.
If Kwon is extradited to South Korea, he could face up to 40 years in prison for crimes he is accused of committing predominantly in that country.
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