Singapore-based Terraform Labs (TFL), the company behind digital assets TerraUSD (UST) and Luna, filed for Chapter 11 bankruptcy in Delaware following the collapse of its cryptocurrencies in 2022.
Terraform Labs, which confirmed its Chapter 11 bankruptcy protection filing, said the filing is “a strategic step that will enable it to continue its operations and support litigation pending in Singapore and U.S. litigation involving the Securities and Exchange Commission.” The outfit also said it would “meet all financial obligations to employees and vendors during the Chapter 11 case” without requiring additional financing.
According to a court document filed today, Terraform Labs’ estimated assets and liabilities range from $100 million to $500 million, while the number of creditors is between 100 and 199.
Terraform Labs plans to continue expanding its Web3 business, according to its statement. The company recently acquired Pulsar Finance, a cross-chain portfolio manager and data provider, and launched Station v3, a cryptocurrency wallet, earlier this month.
“The Terra community and ecosystem have shown unprecedented resilience in the face of adversity, and this action is necessary to allow us to continue working toward our collective goals while resolving the legal challenges that remain outstanding,” said Chris Amani, CEO of Terraform Labs.
Founded in 2018, Terraform Labs wiped out at least $40 billion in market value and collapsed the crypto industry in May 2022.
The bankruptcy filing comes four days after the U.S. SEC agreed to postpone the civil trial against Terraform Labs and the co-founder Do Kwon over an alleged $40 billion cryptocurrency fraud to March 25 from January 29. Kwon is currently in custody in Montenegro for using falsified travel documents to leave the country in March. The Terraform Labs co-founder could be extradited to the U.S. or South Korea in March after the final ruling on extradition, which will rest with Montenegro’s Justice Minister.
In February last year, the U.S. SEC charged Kwon and Terraform Labs with defrauding the U.S. investors who purchased the digital assets Terra USD and Luna.
Kwon owns a 92% stake in Terraform Labs, and Daniel Shin, another co-founder of the company, has an 8% in TFL, per the court filing.
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