New York, January 21, 2024, The Europe Today: In a significant development, Terraform Labs, the entity behind the renowned stablecoin TerraUSD, has officially filed for Chapter 11 bankruptcy in the United States. The filing, submitted to the bankruptcy court in Delaware, discloses assets and liabilities in the range of $100-$500 million.
Despite the financial setback, Terraform Labs reassures its commitment to meeting all financial obligations to employees and vendors throughout the Chapter 11 proceedings, stating that additional financing will not be required. The company also expresses its intention to persist with the expansion of Web3 offerings.
In an official statement, Terraform Labs explains that the filing enables them to execute their business plan while navigating ongoing legal challenges, including representative litigation in Singapore and a case involving the Securities and Exchange Commission (SEC) in the United States.
The SEC’s civil case revolves around the collapse of TerraUSD, a stablecoin designed to maintain a constant $1 value, and the associated traditional token, Luna. Terraform Labs, along with its co-founder Do Kwon, faces allegations linked to the downfall of these cryptocurrencies, resulting in significant turmoil in global cryptocurrency markets two years ago.
A recent development in the legal proceedings is the postponement of the SEC’s trial against Terraform Labs and Do Kwon. The delay is attributed to facilitating Kwon’s extradition for his alleged involvement in a $40 billion cryptocurrency fraud. The collapse of TerraUSD in May 2022 led to both cryptocurrencies losing an estimated $40 billion or more, marking a challenging chapter for Terraform Labs and its stakeholders.
