In the lawsuit filed by the US SEC against Terraform Labs and its co-founder Do Kwon starting in January 2024, the US court has allowed Terraform Labs to hire Dentons law firm.

According to the US Securities and Exchange Commission (SEC), Terraform Labs' payment of up to $166 million to law firm Dentons was strongly criticized. The SEC claimed that Terraform Labs transferred the money to an "opaque bribery fund" for its lawyers and that the bankrupt cryptocurrency company should not be allowed to hire the law firm or pay legal fees for employees during bankruptcy. Terraform Labs is the developer of LUNA and TerraUSD (UST) cryptocurrencies and has voluntarily filed for Chapter 11 bankruptcy protection in Delaware. In its filing with the state bankruptcy court on January 21, the company listed assets and liabilities of $100 million to $500 million, as well as 100 to 199 creditors. Terraform Labs' bankruptcy filing aims to allow the company to continue executing its business plan in the legal proceedings of the securities fraud case brought by the SEC.

The US SEC has raised concerns over Terraform's $166 million payment to law firm Dentons, alleging that the money was diverted into an "opaque slush fund for its lawyers" instead of being used to repay investors and creditors. The SEC has also objected to Terraform's ability to hire Dentons or pay for litigation costs for employees. The payment was made in anticipation of a future judgment in the SEC's lawsuit against Terraform Labs and its founder, Do Kwon, who are currently facing trial over the collapse of TerraUSD. Terraform Labs filed for Chapter 11 bankruptcy in January 2024 after the failure of TerraUSD and the LUNA token caused billions of dollars in investor losses.

Do Kwon, the co-founder of Terraform Labs, is set to be extradited to the United States to face charges of fraud. Despite arguments from Kwon's legal team, the High Court of Podgorica in Montenegro has turned down a request to extradite him to South Korea before the US. Kwon has been facing detention in Montenegro since March 2023 and was sentenced to a four-month prison term for document forgery in June. Terraform Labs has also filed for Chapter 11 bankruptcy protection in the US, with CEO Chris Amani stating that it is a strategic move to contest a fraud lawsuit brought by the US Securities and Exchange Commission.

The former chief financial officer of Terraform Labs, Han Chang-jun, has been transferred to trial by South Korean prosecutors after being detained for 21 days since his arrest on February 8. Prosecutors allege that Han Chang-jun illicitly profited at least 53.6 billion won by selling and trading LUNA under the guise of Terra's normal operations. He is also accused of violating securities regulations by selling LUNA without submitting a securities report, in violation of the Capital Markets Act. Additionally, he is accused of recording approximately 100 million pieces of electronic payment information from Chinese customers on the Terra blockchain without their consent, in violation of the Electronic Financial Transactions Act.

South Korean authorities have arrested former Terra CFO Han Chang-joon, accusing him of illegally profiting approximately $40 million. The charges allege that Han Chang-joon misled investors by falsely marketing Terra stablecoins, knowing they could not be used as actual payment methods. In addition, he is also accused of selling LUNA without proper securities registration and leaking financial information of approximately 100 million Chai Pay customers to the Terra blockchain.

According to reports from local media, Lee, a former developer at Terraform Labs, testified that co-founders Do Kwon and Shin Hyun-seung continue to promote TerraUSD stablecoin as a potential payment option for investors, despite knowing that such products are prohibited by local regulations. These testimonies were obtained during the third trial of eight former Terraform Labs members, including Shin, who were questioned as witnesses. Lee's full name was not disclosed due to privacy regulations in South Korea.

The Montenegrin police announced today that Han Chang-joon, former CFO of Terraform Labs, has been extradited to South Korea. The decision was made by the Montenegrin Ministry of Justice to enable South Korea to bring criminal charges against him for several criminal offenses related to financial investment services, investment, and capital market fraud. In South Korea, these crimes can carry a life sentence. In March 2023, Do Kwon and Han Chang-joon were arrested at the Podgorica airport while attempting to flee on a private plane, ending a six-month international manhunt. Terraform Labs filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code in January of this year.

Do Hung Kwon, the former CEO of Terraform Labs, has been accused of fraud by the US SEC due to the collapse of the algorithmic stablecoin Terra USD. The trial was originally scheduled for January 29th, but due to uncertainty surrounding extradition, the trial date has been postponed to the end of March this year.

The trial of Terraform Labs founder Do Kwon has been postponed until his extradition to the US, which is expected in March. The United States Securities and Exchange Commission (SEC) agreed to the delay, which was requested by Kwon's lawyers due to slow extradition proceedings in Montenegro. The SEC is against separating the case against Kwon from the case against Terraform, as both entities are defendants in the charges brought by the SEC. The charges accuse Kwon and Terraform Labs of orchestrating a multi-billion dollar crypto asset securities fraud.