The U.S. SEC Uncovers Suspicious Fund Movements by Terraform Labs
The U.S. Securities and Exchange Commission (SEC) has recently uncovered suspicious movements of funds by Terraform Labs, raising concerns about potential financial misconduct. The SEC discovered that Terraform Labs made a payment of $166 million to its lawyers, Dentons, prior to declaring bankruptcy. The commission believes that these funds were potentially transferred to an “opaque fund” with the intention of using them to finance a legal battle against the SEC.
Payments to Dentons
- The SEC found that 90 days before declaring bankruptcy, Terraform Labs paid Dentons $122 million.
- Later, the law firm received an additional $44 million from the company.
The SEC suspects that these payments were made with the expectation of using the funds for a legal dispute with the regulatory body.
Funds Already Spent
According to representatives from the SEC, more than half of the funds have already been spent by Terraform Labs. As a result:
- Dentons U.S. account LLC currently holds $81 million from Terraform Labs.
- However, the company cannot represent Terraform Labs until it returns the previously spent funds, as demanded by the SEC.
This move by the SEC aims to prevent further misuse of funds and ensure that proper legal representation is maintained throughout the bankruptcy process.
Allegations Against Dentons
The SEC officials have accused Dentons of being involved in previous financial misconduct related to siphoning off funds from Terraform Labs. They believe that these diverted funds could have been used to pay for enforcement decisions and cover other expenses.
Paying Consulting Bills for Do Kwon
Terraform Labs also used a portion of the funds to pay consulting bills for its former founder, Do Kwon. It has been reported that these payments were made in relation to an extradition case involving Kwon. Currently, Kwon is in custody in Montenegro, where he was arrested for using a fake passport. The United States is seeking his extradition to face trial on charges of organizing large-scale fraud.
Hot Take: SEC Cracks Down on Terraform Labs’ Suspicious Fund Movements
The recent discovery by the U.S. Securities and Exchange Commission (SEC) regarding suspicious fund movements by Terraform Labs raises serious concerns about potential financial misconduct within the company. The SEC’s investigation revealed that Terraform Labs made significant payments to its lawyers, Dentons, prior to declaring bankruptcy. These funds were suspected to have been transferred to an “opaque fund” with the intention of financing a legal battle against the SEC.
By taking action and demanding the return of funds from Dentons, the SEC aims to prevent further misuse of resources and ensure transparency throughout the bankruptcy process. This crackdown sends a strong message that financial misconduct will not be tolerated, even in the volatile world of cryptocurrencies.
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