Terraform Labs, a bankrupt crypto firm, is scheduled for a Chapter 11 bankruptcy reorganization hearing on September 19 in Beijing. The company is facing an important turning point right now.
The results of this hearing will significantly influence the company’s future. Since its sudden collapse in 2022, it has been mired in legal disputes and financial instability.
The court’s decision will determine whether the company can effectively restructure and emerge from bankruptcy or be compelled to liquidate its remaining assets and cease operations entirely.
In May 2022, Terraform Lab’s stablecoin UST suffered a disastrous collapse, resulting in a loss of billions of dollars in value. This incident marked a significant turn in the company’s fortunes.
In January 2024, Terraform Labs initiated an extended and elaborate legal procedure by filing for Chapter 11 bankruptcy in Delaware. The company’s co-founder and former CEO, Do Kwon, who was at the center of the controversy, also met legal action.
Terraform linked coins, LUNA and LUNC market reaction
In July 2024, Terraform and Kwon struck a joint settlement with the SEC, which included the payment of a staggering $4.5 billion in penalties, disgorgement, and interest. The settlement effectively prohibited Terraform and Kwon from participating in the crypto sector, marking the end of an era for the previously influential organization.
This event resulted in a lawsuit from the United States Securities and Exchange Commission (SEC) in February 2023, as well as intense scrutiny from regulators and a loss of investor confidence.
LUNA and LUNC prices are projected to rise as the firm burns tokens in Terra and LFG wallets. This has also resulted in delisting affected crypto by crypto exchanges like eToro and Gemini. Investors are withdrawing coins from exchanges and staking them.
Following the announcement, the price of LUNA briefly increased by over 2%, and it is currently at $0.33, up 0.53%. The 24-hour low is $0.32, and the high is $0.339. In addition, trading volume has surged by 17%, showing traders’ interest.
Meanwhile, LUNC’s price increased over 2% to $0.00008 from a 24-hour low of $0.00007. The 24-hour trading volumes increased by 37% as traders moved positions amid the broader crypto market selloff.
Terraform Labs is currently in the process of liquidating major assets as it ends its operations as part of the bankruptcy proceedings.
