Terraform Labs filed a petition for Chapter 11 bankruptcy protection in Delaware on Sunday. According to court documents, the company’s estimated assets and liabilities range between $100 million and $500 million each and an estimated 100 to 199 creditors.
Terraform Labs (TFL), the digital-asset company behind the 2022 collapse of the TerraUSD stablecoin, has filed for Chapter 11 bankruptcy protection in the United States.
Assets and Liabilities Range between $100-$500 Million
Terraform Labs Pte., the digital asset firm co-founded by Do Kwon and behind the collapse of the TerraUSD stablecoin, filed for Chapter 11 bankruptcy protection in Delaware. According to reports by news agencies Reuters and Bloomberg, documents filed with the bankruptcy court on Sunday indicate the Singapore-based company listed assets and liabilities in the range of $100 million to $500 million. The documents further estimate the number of Terraform’s creditors to be around 100 and 199.
TerraUSD, a dollar-pegged stablecoin and Terra’s LUNA token collapsed in 2022, sending the crypto market into a spiral. TerraUSD and LUNA’s collapse wiped out at least $40 billion.
Terraform Labs stated it would meet all financial obligations to employees and vendors during the Chapter 11 case without needing additional funding.
Reuters cites a statement in which Terraform Labs said:
“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).”
According to Bloomberg, Terraform Labs Chief Executive Officer Chris Amani had the following to say:
“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.”
Judge Rules Terraform Labs is Liable for Selling Unregistered Securities
The documents filed on January 21 listed Kwon, who is wanted by the US and South Korea, as the 92% shareholder of Terraform Labs. Daniel Shin, another South Korean entrepreneur, owns the company’s remaining shares.
In December, the judge presiding over the SEC’s lawsuit against Terraform Labs and Do Kwon ruled in the regulator’s favour, finding Kwon and Terraform Labs guilty of violating securities laws when it illegally sold its crypto to the public. Judge Jed Rakoff said Terraform failed to register $LUNA and $MIR as securities.
Trial Postponed to Allow for Extradition
Kwon’s jury trial, which was set for January 29, 2024, has been postponed until March. The postponement allows sufficient time for Kwon’s extradition from the Montenegrin prison where he is currently being held after being found guilty of forging travel documents. According to Kwon’s lawyer, his detention in Montenegro could hinder his timely arrival in the US for the trial. In a court filing requesting the postponement, Kwon’s legal team said:
“While Mr. Kwon, through his counsel in Montenegro, has made every effort to be extradited from Montenegro as quickly as possible, the process has been slow going and is made more complicated by the dueling requests and the fact that Mr. Kwon is serving a sentence in Montenegro for his conviction on the local charges there.”
Judge Rakoff approved the postponement request last week, and the SEC agreed to a later court date. In his ruling, Judge Rakoff said,
“Despite Kwon’s representation that he has consented to his extradition from Montenegro, where he is presently being held, there is no absolute guarantee that he will be released in time for his appearance at a late March trial.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
