Summary
The SEC criticizes Terraform Labs for paying $166 million retainer to law firm Dentons, claiming it was used as an opaque slush fund. The SEC argues that Terraform Labs should not be allowed to hire Dentons or pay for legal costs during bankruptcy. Terraform Labs filed for Chapter 11 bankruptcy and plans to use it to appeal the SEC’s securities fraud case. Co-founder Do Kwon is facing legal trouble and is currently in jail.
Key Points
1. The U.S. Securities and Exchange Commission (SEC) criticized Terraform Labs for making a $166 million retainer payment to law firm Dentons, calling it a “staggering” amount.
2. The SEC argued that Terraform Labs used the money to create an “opaque slush fund for its lawyers” and that the bankrupt crypto firm should not be allowed to hire Dentons or pay litigation costs for employees during its bankruptcy.
3. The SEC insisted that Dentons should not represent Terraform Labs unless it returns the remaining $81 million in the retainer account and that its fees should be supervised by the bankruptcy court.