Terraform Labs has challenged a $166 million fee paid by the U.S. Securities and Exchange Commission (SEC) to law firm Dentons.
In its filing with the court, the bankrupt #cryptocurrency company called the SEC's challenge "a troubling example of government overreach" and said it was motivated by a "desire to prejudicially distract opponents on the eve of litigation.
TerraForm Labs argued that the court should overrule the SEC's objections, which it said were "rife with misapplication of the law and factual errors," and approve the law firm's fee.
The SEC challenged TerraForm Labs' payment of a "staggering" $166 million in agency fees to Dentons, arguing that the company should not be allowed to hire Dentons and pay legal fees to its employees during bankruptcy.
The U. S. Securities and Exchange Commission (SEC) has condemned Terraform Labs' "staggering" $166 million payment to law firm Dentons, saying the SEC believes Terraform Labs "diverted" its funds into an "opaque fund for lawyers" and that the bankrupt cryptocurrency company hired Dentons and said it should not be allowed to pay legal fees to employees during the bankruptcy process, Reuters reports. TerraForm Labs filed for Chapter 11 bankruptcy in Delaware, regulators noted.
Regulators argued that a $122 million advance payment was made to Dentons 90 days before the bankruptcy filing and that the funds could have been used to satisfy Terraform Labs' payment obligations, creating a potential conflict of interest between the two companies.
Dentons argued that it should be barred from representing Terraform Labs until Terraform Labs repaid the $81 million remaining in the prepayment account and that its fees should be subject to the supervision of the bankruptcy court.
Last month, Terraform Labs filed for Chapter 11 bankruptcy protection in Delaware.
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