Terraform Labs files for bankruptcy protection in the US

BODGORICA, MONTENEGRO – JUNE 16: Du Quan is taken outside the court on June 16, 2023 in Podgorica, Montenegro. Cryptocurrency TerraUSD and its companion token Luna collapsed in 2022, wiping out about US$40 billion from the cryptocurrency market and Do Quan was charged with fraud by US prosecutors following his arrest in Montenegro. (Photo by Filip Filipovic/Getty Images)

Filip Filipovic | Getty Images News | Good pictures

Terraform Labs, the company behind the stablecoin TerraUSD that crashed and spun cryptocurrency markets in 2022, has filed for Chapter 11 bankruptcy in the United States, according to court documents filed on Sunday.

In a bankruptcy court filing in Delaware, Singapore-based Terraform Labs listed assets and liabilities in the $100-$500 million range.

Terraform Labs said it will meet all financial obligations to employees and vendors in the Chapter 11 case without requiring additional financing. Web3 also plans to continue expanding its offerings.

“Pending ongoing legal proceedings, including pending Singapore representative cases and US cases involving the Securities and Exchange Commission (SEC), will allow TFL to execute its business plan,” Terraform Labs said in a statement.

The SEC's civil suit against Terraform and Kwon is linked to the collapse of TerraUSD, a “stablecoin” designed to maintain a constant $1 price, and Luna, a legacy token closely related to TerraUSD.

Recently, a federal judge put on hold the SEC's investigation into the company and its co-founder Do Kwon for alleged $40 billion cryptocurrency fraud.

Kwon and Terraform Labs are responsible for the two cryptocurrencies that caused turmoil in crypto markets around the world two years ago.

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Both cryptocurrencies lost an estimated $40 billion or more when TerraUSD failed to maintain its $1 peg in May 2022.

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