Terraform Labs Gave Lawyers $122 Million ‘Slush Fund,’ SEC Says

Terraform Labs Pte. transferred nearly $122 million to its lawyers just before it filed for bankruptcy and used some of the money to cover legal expenses for criminally charged co-founder Do Kwon, according to the US Securities and Exchange Commission.

The SEC is challenging cash transfers to Terraform’s top law firm, Dentons US, that occurred in the three months before the company filed for bankruptcy in January, court papers show. The firm behind the now-collapsed TerraUSD stablecoin said it filed Chapter 11 because it can’t afford penalties sought by federal regulators.

Although the SEC said it doesn’t oppose ...