The cryptocurrency firm responsible for the crash of TerraUSD and Luna tokens, Terraform Labs, has filed for bankruptcy in the United States.
The tokens collapsed in May, losing $40 billion in value and contributing to the broader “cryptocrash” of 2022.
Co-founder Do Kwon, currently in jail in Montenegro for forging documents, faces fraud charges in the US and South Korea, awaiting extradition.
A third legal case is ongoing in Singapore, where the company is registered.
Terraform Labs’ Luna token gained attention in December 2021, reaching a high of $116 in April 2022.
However, on May 9, 2022, it collapsed, losing 99% of its value in 48 hours, linked algorithmically to TerraUSD, a stablecoin.
The crash caused panic in the crypto market, resulting in investors pulling billions from other cryptocurrencies.
In the bankruptcy announcement, Terraform Labs CEO Chris Amani stated, “This action is necessary to allow us to continue working toward our collective goals while resolving the legal challenges that remain outstanding.” The Chapter 11 bankruptcy filing enables the company to continue operations.
Terraform Labs provides blockchain and Web3-related services, with bankruptcy documents listing assets between $100 million and $500 million.
Do Kwon owns 92% of the shares, with co-founder Daniel Hyunsung Shin owning the remaining 8%.
Do Kwon’s arrest in Montenegro in March 2023 led to a guilty verdict for forging documents, and he is awaiting extradition to either South Korea or the US.
The bankruptcy filing aims to address outstanding legal challenges while ensuring financial obligations to employees and vendors are met.
Source-BBC
