Terraform Labs seeks ‘do-or-die’ appeal via bankruptcy to fight SEC

Singapore-based Terraform Labs says its recent bankruptcy filing will help it pursue a “do-or-die” appeal against the U.S. Securities and Exchange Commission (SEC).

According to a Reuters report, Terraform Labs, the developer behind the Terra blockchain ecosystem, filed for bankruptcy earlier in January due to potential financial constraints in dealing with an unresolved judgment and pursuing an appeal with the SEC.

In December 2023, a U.S. court ruled that Terraform Labs and its founder, Do Kwon, violated U.S. law by failing to register two cryptocurrencies: LUNA and MIR, which the SEC deemed as securities. The court’s judgment could potentially exceed the debtor’s assets, according to Terraform Labs’ Head of Company Operations, Chris Amani.

“The exact size of a money judgment remains unknown, but it could very well outstrip the debtor’s assets.”

Chris Amani

The firm has around $28 million worth of Bitcoin (BTC), $7 million in various altcoins, and approximately $87 million in its token, Luna. To proceed with an appeal, Terraform Labs must post a bond of 110% of the total judgment value, the report notes.

The company is currently facing fraud claims, with the trial postponed to mid-April. Kwon’s lawyers have sought approval to delay Terra’s trial until Mar. 18, citing his attendance as a former crypto tycoon. If the new date is not met, Kwon will not file for a second extension.

Earlier in January, Terraform Labs filed for Chapter 11 bankruptcy protection, seeking a way to continue executing its business plan while navigating ongoing legal proceedings, including “representative litigation pending in Singapore and U.S. litigation” involving the SEC.