Terraform Labs, the organization behind the collapsed TerraUSD (UST) stablecoin, has filed for Chapter 11 bankruptcy protection in the United States. This development follows a tumultuous period for the firm and its co-founder Do Kwon.
In a recent legal filing on Jan. 21, Terraform Labs sought protection at the United States Bankruptcy Court for the District of Delaware. The filing indicates that the company estimates its liabilities and assets to be in the range of $100 million to $500 million.
Chris Amani, CEO of Terraform Labs, commented on the bankruptcy filing in a separate statement. He acknowledged the challenges faced by the Terra community and ecosystem, emphasizing the necessity of this action to address legal issues while continuing to work towards the ecosystem’s goals. Amani expressed confidence in the resilience and growth of the ecosystem despite past setbacks.
This bankruptcy filing occurred shortly after the U.S. Securities and Exchange Commission (SEC) agreed to delay Do Kwon’s fraud trial to March 25, following a request from his legal team for a postponement.
The downfall of Terraform Labs began in May 2022 with the collapse of its Terra ecosystem. Following the implosion, Kwon’s whereabouts became a subject of speculation until his arrest in Montenegro in March 2023 for using forged travel documents.
The SEC had previously charged Terraform Labs and Kwon in February 2023, accusing them of orchestrating a multi-billion dollar fraud involving the tokens UST and Terra (LUNA).
Currently, both the United States and South Korea are seeking Kwon’s extradition. Speculation is rife regarding the possibility of Kwon facing multiple sentences in both jurisdictions. If extradited to South Korea, Kwon potentially faces a 40-year jail term for the majority of the alleged crimes committed there.