Terraform Labs Fights Back Against SEC’s Counsel Payment Objections
Terraform Labs submitted a filing on Monday to address the SEC’s opposition to the company’s request to engage Dentons U.S. LLC as special counsel in its current Chapter 11 bankruptcy proceedings.
The company called the SEC’s attempts to block its ability to pay legal fees a “troubling example of government overreach” designed to hinder its defense ahead of an upcoming fraud trial.
Key Details:
- The SEC objected to Terraform paying Dentons $166 million.
- Claimed funds were diverted to the “opaque slush fund.”
- Terraform says accusations based on false claims.
- Argue fees are vital to mounting the SEC enforcement defense.
In a filing submitted to the Delaware bankruptcy court, Terraform accused the SEC of distorting facts and legal interpretations surrounding its retention of Dentons.
Read more: Nigeria Demands $10 Billion From Binance: BBC
“That the SEC, the very party pursuing the Debtor in the SEC Enforcement Action, filed such a vehement objection to the Debtor’s spending its own funds to ensure an adequate defense in the SEC Enforcement Action is a troubling example of government overreach,” Terraform Labs said in the filing.
Terraform Labs requested authority to pay legal fees
The company maintained that access to top-tier legal representation remains imperative for contesting the SEC’s pending fraud charges and cooperating with a separate Department of Justice probe.
By painting the SEC’s opposition as misguided government overreach, Terraform hopes to persuade the court that the watchdog has hidden motives in denying its ability to fund an adequate legal defense.
Read more: State Attorneys General Argue SEC Overreach In Kraken Lawsuit
The company characterized the objections as a calculated ploy to divert resources and attention at a critical juncture just before their scheduled court date.
Terraform, the company behind the collapsed TerraUSD stablecoin ecosystem, has found itself battling simultaneous legal challenges on multiple fronts since collapsing in May 2022.
The SEC’s enforcement action alleging securities fraud and the Justice Department’s criminal probe have forced the company to seek bankruptcy protection while contesting the charges.
