According to Terraform Labs, the decision to file for bankruptcy was made to make it easier for the company to challenge the case that the US SEC had filed against it.
According to CEO Chris Amani, this action is essential for their appeal against the US SEC litigation. Terraform Labs typically needs to provide a “supersedeas bond,” which is 110% of the entire verdict, in order to appeal the SEC case.
According to the material that was provided, Amani stated that the argument in the next appeal will be that the SEC lacks the necessary jurisdiction to bring charges against the company or Do Kwon, the co-founder.
Amani argued that Terraform Labs’ digital assets shouldn’t be classified as securities and that the SEC lacked jurisdiction over the matter.
Furthermore, according to Amani, Terraform Labs’ treasury presently has about $28 million in Bitcoin, $7 million in other cryptocurrencies, and roughly $87 million in Luna (LUNA) tokens.