Terraform Labs can retain its attorneys in its chapter proceedings, a decide dominated Tuesday.
The ruling comes after the Securities and Alternate Fee challenged the bankrupt firm’s retainer of $166 million for the attorneys.
The chapter court docket discovered, thanks to 2 declarations in help of the corporate’s transfer, that the legislation agency “doesn’t symbolize or maintain any curiosity opposed to the debtor.”
Moreover, the legislation agency agreed to return $48 million — of the quantity pre-paid for the agency’s work on the case — to Terraform.
Learn extra: Terraform faces ‘important legal responsibility’ after SEC trial
The company beforehand argued that “the timing and large quantity of those transfers, given the continuing litigation with the SEC, warrant continuing with warning to guard Debtor belongings — which can in the end belong to the investor victims the SEC alleges have been defrauded by the debtor.”
Terraform filed to retain Dentons as its counsel in February.
The SEC argued on Feb. 27 that the timing was “suspicious” because of its litigation towards the now-bankrupt firm.
The SEC and Terraform have confronted off in court docket forward of an upcoming trial, arguing for and towards a partial ruling on the securities gross sales alleged by the SEC. Choose Jed Rakoff sided with the regulatory company, ruling that UST, LUNA, wLUNA and MIR “are securities as a result of they’re funding contracts.”
The regulatory company referred to as out the loss in its pushback towards the Dentons retainer, saying that $122 million was transferred into an “opaque slush fund” for its attorneys earlier than it filed for chapter.
A trial within the SEC’s case towards Terraform Labs and its former CEO Do Kwon is about to happen later this month. The company alleged that the 2 supplied and bought cryptocurrencies that the SEC believes to be securities, in addition to “orchestrating a multi-billion greenback crypto asset securities fraud” regarding its algorithmic stablecoin TerraUSD.
The stablecoin collapsed within the spring of 2022, simply months earlier than the FTX collapse. It wiped billions from the crypto market on the time, and the ripple results led to the bankruptcies of Three Arrows Capital, Celsius and Voyager.
Terraform Labs filed for chapter earlier this 12 months, calling the transfer a “strategic step” that might “allow it to proceed its operations and help for the Terra group and ecosystem.”
It additionally claimed that the chapter would enable the corporate to navigate its “authorized proceedings” in each Singapore and the US.