Terraform Labs Allowed to Hire Law Firm Dentons in Bankruptcy Case by U.S. Court: Reuters
Dentons agreed to send $48 million back to Terraform after objections from Terraform's creditors, the SEC, and the U.S. Justice Department.
Mar 13, 2024 at 10:31 a.m. UTC:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/2BNKFNASI5DXZOEQ3ZFXGBONMU.jpg)
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- Terraform Labs has been allowed to hire law firm Dentons by a U.S. court, Reuters reported on Wednesday.
- Terraform's creditors, the SEC, and the U.S. Justice Department objected to Terraform hiring Dentons in February.
A U.S. court has allowed Terraform Labs to hire law firm Dentons in a lawsuit brought against it and its co-founder Do Kwon by the U.S. Securities & Exchange Commission (SEC) in Jan. 2024.
Last month, Terraform's creditors, the SEC, and the U.S. Justice Department objected to Terraform hiring Dentons after it had filed for bankruptcy in the U.S. in Jan. 2024.
Their primary concern was that Terraform had sent as much as $166 million in retainer payments since 2023 to lawyers of Terraform, taking the cash away from the reach of its creditors.
While U.S. Bankruptcy Judge Brendan Shannon ruled that the legal costs were a "necessary appropriate" use of Terraform's limited resources, Dentons agreed to send $48 million back to Terraform.
The law firm also agreed to more oversight from the bankruptcy court going forward.
Terraform Labs was the developer behind the failed Terra platform and its LUNA tokens. The project collapsed in May 2022 as investors started to liquidate their earnings from the platform, kicking a flywheel effect in motion that eventually caused LUNA to drop 99%.
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