The U.S. Securities and Exchange Commission (SEC) has raised objections to Terraform Labs’ decision to hire Dentons as its special counsel in ongoing Chapter 11 proceedings. The SEC has labeled the $166 million retainer with Dentons as an effort to skirt the payment of a judgment in an enforcement action. This objection by the SEC challenges Terraform’s rationale for hiring Dentons, given Dentons’ global presence as a law firm and its historical relationship with Terraform.
On February 13, Terraform filed an application to the court, seeking its approval for retaining Dentons as a special counsel to help resolve ongoing litigation. These cases include an SEC action in the Southern District of New York against both Terraform and its co-founder Kwon Do Hyeong, another suit against the company in a Singaporean court, and various other matters involving Terraform and its employees.
The SEC has appealed to Judge Brendan Linehan Shannon to deny this application unless Dentons agrees to return the $81 million still in reserve from the retainer back to Terraform. Furthermore, the regulator advised Dentons to file its engagement letters and payment agreement details with the court. For more details, please refer to this coverage.