TechFlow news — A filing submitted to a Delaware bankruptcy court by the U.S. Securities and Exchange Commission (SEC) seeks to reject Terraform Labs’ request to retain Dentons US LLP as its special counsel, claiming that "suspicious" amounts have already been paid to Dentons.
The SEC stated in the filing that Terraform Labs transferred $166 million into a prepayment retainer account for Dentons, with $122 million of that amount transferred within 90 days before filing for bankruptcy. The SEC argues this move appears designed to remove assets from the company that could otherwise be used to satisfy any judgment arising from the agency’s enforcement actions.
The agency claims the $122 million was funneled into a lawyer’s “opaque slush fund,” which Terraform Labs could then use as a “war chest” to continue its legal battle against the SEC.
According to the filing, more than half of the amount paid to Dentons has already been applied toward litigation expenses, while $81 million remains in the law firm’s prepayment retainer account. The SEC argues that unless Dentons returns the remaining funds, it should not be authorized to represent Terraform Labs.
