Terraform Labs announced that it has filed for bankruptcy to appeal the lawsuit from the US Securities and Exchange Commission (SEC). Chapter 11 bankruptcy is critical to successfully filing an appeal with the SEC, the company's CEO, Chris Amani, said in a Jan. 30 filing with the Delaware Bankruptcy Court. Terraform Labs filed for bankruptcy on January 21.

Amani will argue that the company's upcoming appeal means the SEC lacks the necessary authority to charge the company and its co-founder, Do Kwon. It also claimed that Terraform Labs' crypto assets could not be called securities and that the case was outside the SEC's jurisdiction.

Amani stated that Terraform Labs' treasury department holds approximately $28 million worth of Bitcoin (BTC), $7 million worth of various cryptocurrencies, and approximately $87 million worth of Luna (LUNA) tokens.

The SEC filed a civil lawsuit against Terraform Labs and Kwon in February last year, accusing them both of orchestrating a "multi-billion dollar cryptoasset securities fraud" related to tokens formerly known as UST and Terra (LUNA).

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