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Quantum key distribution (QKD) can provide unconditional security to next-generation communication networks guaranteed by the laws of quantum physics. This article studies the secret key rate (SKR) of a continuous variable QKD (CV-QKD) system using multiple-input multiple-output (MIMO) transmission and operating at terahertz (THz) frequencies. Distinct from previous works, we consider a practical “restricted” eavesdropping scenario in which Eve can collect only a fraction of photons lost in the environment. We propose a system model for the MIMO THz CV-QKD system that accounts for restricted eavesdropping via a lossy wireless channel between Alice and Eve. We derive for this system new SKR expressions for both coherent-state-based and squeezed-state-based CV-QKD protocols. Our results show that previous analysis assuming unrestricted eavesdropping leads to overly pessimistic SKRs, and that …