Terraform Labs has filed for Chapter 11 bankruptcy amidst a securities fraud lawsuit from the SEC.

CEO Chris Amani believes the bankruptcy will allow for an organized way to handle claims and facilitate an appeal.

The SEC alleges that Terraform Labs and founder Do Kwon committed multibillion-dollar securities fraud involving crypto assets.

Terraform Labs plans to challenge the SEC's jurisdiction over its tokens in its appeal.

Without bankruptcy protection, Terraform Labs could be forced into liquidation post-trial.

Do Kwon is set to stand trial on March 25, while residing in Montenegro.

New interim CEO Chris Amani is tasked with restoring Terraform Labs' reputation post-Terra ecosystem crash in May 2022.