Terraform Labs Says Bankruptcy Protection Would Allow it Appeal against SEC’s Securities Fraud Lawsuit

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By BitcoinWiki News

Key Takeaways:

  • Terraform Labs filed for Chapter 11 bankruptcy protection to pursue an appeal against the SEC’s securities fraud lawsuit.
  • Company’s CEO emphasized the importance of bankruptcy protection to preserve value for stakeholders, including the Terra community.
  • Bankruptcy proceedings are set to begin with a hearing on Wednesday in the United States.
  • Without Chapter 11 protection, liquidation would be a probable outcome after the trial and final judgment.
  • A successful appeal against the SEC’s claims could reduce Terraform Labs’ liabilities and lead to positive financial outcomes.
  • Terraform Labs and its former CEO were charged with securities fraud by the SEC in February 2023.
  • Former Terra CEO Do Kwon, who was arrested in Montenegro, is awaiting extradition as the SEC pursues a civil case against Terraform Labs.
  • Kwon’s legal team filed an appeal against the Montenegro High Court’s decision to uphold the extradition requests from both the United States and South Korea.

1. Terraform Labs Files for Chapter 11 Bankruptcy

Terraform Labs has filed for Chapter 11 bankruptcy protection in order to enable the pursuit of an appeal against the US Securities and Exchange Commission’s (SEC) securities fraud lawsuit.

2. Importance of Bankruptcy Protection

Terraform Labs CEO Chris Amani emphasized the importance of bankruptcy protection for the company’s operations and the preservation of value for stakeholders, including the Terra community.

3. Potential Outcome Without Bankruptcy Protection

Amani explained that without the protection of Chapter 11, liquidation would be a probable outcome after the trial and final judgment. However, a successful appeal against the SEC’s claims could reduce Terraform Labs’ liabilities and potentially lead to positive financial outcomes for the company, its creditors, and the community.

4. SEC Lawsuit and Extradition of Former CEO

The SEC charged Terraform Labs and its former CEO, Kwon Do-hyeong, with securities fraud. Kwon, who was arrested in Montenegro, is currently awaiting extradition. The SEC has been pursuing a civil case against Terraform Labs and Kwon, linking their operations to an alleged $40 billion cryptocurrency fraud.

5. Legal Process and Extradition Request

Do Kwon’s legal team filed an appeal against the Montenegro High Court’s decision to uphold the extradition requests from both the United States and South Korea. Kwon’s legal representative in Montenegro has presented an argument favoring Kwon’s extradition to South Korea over the United States.

This summary covers Terraform Labs’ Chapter 11 bankruptcy filing, the importance of bankruptcy protection, potential outcomes, the SEC lawsuit, and the legal process surrounding the extradition of its former CEO.

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