Terraform Labs hasn’t been able to recover and now has to call it quits
Terraform Labs, the company created by Do Kwon and behind the now-defunct TerraUSD (UST) stablecoin, has filed for Chapter 11 bankruptcy protection in the US. The filing was submitted to the United States Bankruptcy Court for the District of Delaware on January 21, with the company reporting between $100 and $500 million in assets and liabilities.
“The Terra community and ecosystem have shown unprecedented resilience in the face of adversity, and this action is necessary to allow us to continue working toward our collective goals while resolving the legal challenges that remain outstanding,” said Terraform Labs CEO Chris Amani in an independent statement.
“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.”
The bankruptcy filing was made four days after the US Securities and Exchange Commission (SEC) consented to postpone Kwon’s forthcoming fraud trial to March 25 after obtaining an appeal from his legal team.
The Terra ecosystem crumpled in May 2022. A short time after the firm collapsed, Kwon’s whereabouts were unknown for several months until he was located in Montenegro. He was arrested in March 2023 after trying to use false travel documents to exit the country.
The SEC filed Civil charges against Kwon and Terraform Labs in February 2023. They allegedly staged a “multi-billion dollar crypto asset securities fraud” related to the former tokens, UST and Terra (LUNA).
US and South Korean authorities are seeking Kwon’s extradition. There’s been a growing assumption that he could face multiple sentences in both countries, including a 40-year sentence if he’s extradited to his home country, where most of the alleged crimes were committed.
