Remember Terraform Labs, the company behind the Luna crash of May 2022? The company has filed for bankruptcy protection in the United States, per reports on Monday morning. Bankruptcy protection is the status given to an individual or business that is unable to pay back its debts in full.
The embattled crypto firm behind the plummeted and now defunct TerraUSD, a dollar-pegged stablecoin and $LUNA, declared in the Sunday filing that it has between $100 to $500 million in estimated assets and the same amount in liabilities.
Recall that in May 2022, the Do Kwon-founded Terraform Labs was behind the collapse that destroyed billions of dollars of investors’ wealth, in what is known to have kickstarted a series of unfortunate events in the crypto ecosystem.
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Here is all you need to know about the recent LUNA, UST, Bitcoin price crash
This bankruptcy filing comes just four days after the United States Securities and Exchange Commission (SEC) announced the agreement to postpone Do Kwon’s upcoming fraud trial to March 25 after receiving a request from his legal team to delay the proceedings.
More on the Terraform Labs bankruptcy filing
The firm filed for Chapter 11 bankruptcy protection at the United States Bankruptcy Court for the District of Delaware on Sunday, citing between $100 and $500 million in estimated liabilities and assets.
According to the Terraform Labs statement, the filing will allow the company to execute its business plan while navigating ongoing legal proceedings, including representative litigation pending in Singapore and U.S. litigation.
Chris Amani, CEO of Terraform Labs also said in a statement that the Terra community and ecosystem have shown unprecedented resilience in the face of adversity, and this action is necessary to allow the company to continue working toward their collective goals while resolving the legal challenges that remain outstanding.
The CEO added that:
“We have overcome significant challenges before and, against long odds, the ecosystem survived and even grew in new ways post-depeg; we look forward to the successful resolution of the outstanding legal proceedings.”
Do Kwon and Terraform Lab trials
When the Do Kwon-founded company imploded in May 2022, the South Korean who is believed to have caused the collapse due to his erratic behaviour was at large until March 2023 when he was arrested in Montenegro after attempting to flee the country with falsified travel documents.
Read also:
Terra’s Do Kwon jailed for 4 months
In February 2023, the United States Securities and Exchange Commission filed civil charges against Do Kwon and his company. Both parties were alleged to have orchestrated a “multi-billion dollar crypto asset securities fraud” related to the tokens formerly known as UST and Terra (LUNA).
Now, there is a growing speculation that Do Kwon might be subjected to criminal charges in the United States as well as in South Korea, as both countries continue to seek his extradition.
Reports say Do Kwon could face up to 40 years in prison if he is extradited to South Korea, as he is alleged to have committed the majority of his crimes there.
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