January 21, 2024
Terraform Labs (TFL), the Singapore-based company behind the troubled stablecoin TerraUSD, has filed for Chapter 11 bankruptcy in the United States, marking a significant development following the collapse of TerraUSD in 2022. The filing, submitted to the bankruptcy court in Delaware, revealed that Terraform Labs listed assets and liabilities in the range of $100-$500 million.
The stablecoin TerraUSD, designed to maintain a constant $1 price, faced severe challenges leading to its collapse and subsequent turbulence in cryptocurrency markets. Terraform Labs expressed its commitment to meeting all financial obligations to employees and vendors during the Chapter 11 case without the need for additional financing. The company also announced plans to continue the expansion of its Web3 offerings.
In a statement, Terraform Labs stated, “The filing will allow TFL to execute on its business plan while navigating ongoing legal proceedings, including representative litigation pending in Singapore and U.S. litigation involving the Securities and Exchange Commission (SEC).”
The SEC’s civil case against Terraform Labs and its co-founder, Do Kwon, is linked to the collapse of TerraUSD and the more traditional token Luna, closely associated with TerraUSD. The stablecoin’s failure to maintain its $1 peg in May 2022 resulted in significant losses, estimated at $40 billion or more, impacting crypto markets worldwide.
Do Kwon, the cryptocurrency entrepreneur behind TerraUSD, was recently arrested in Podgorica, facing charges of forging official documents. A federal judge has postponed the SEC trial against Terraform Labs and Kwon, citing the need for Kwon’s extradition for his participation in an alleged $40 billion cryptocurrency fraud.
As Terraform Labs navigates these legal challenges, the cryptocurrency community watches closely, anticipating the resolution of ongoing proceedings and the impact on the future of TerraUSD and associated tokens.($1 = 1.3431 Singapore dollars)
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