Terraform Labs has filed for Chapter 11 bankruptcy protection, less than two years after the company's cryptocurrency collapse devastated traders around the world.
NEW YORK – Terraform Labs has filed for Chapter 11 bankruptcy protection, less than two years after the company's cryptocurrency collapse devastated investors around the world.
The Singaporean cryptocurrency company filed for protection in the US Bankruptcy Court in Delaware on Sunday, according to court documents. Terraform listed its estimated assets and liabilities in the range of $100 million to $500 million.
Terraform said the bankruptcy filing will allow the company to “execute on its business plan while navigating the ongoing legal proceedings,” which include lawsuits in Singapore and the United States.
Terraform added that it intends to fulfill all financial obligations to employees and vendors during this bankruptcy case, and does not require additional financing. The company also plans to continue expanding its Web3 offerings.
“We have overcome significant challenges before, and despite long odds, the ecosystem has survived and even grown in new ways following the disengagement; we look forward to the successful resolution of the pending legal proceedings,” Chris Amani, CEO of Terraform Labs, said in a prepared statement. .
Terrform's legal troubles worsened after the collapse of the cryptocurrencies TerraUSD and Luna in May 2022.
Do Kwon, founder of Terraform Labs, was arrested in Montenegro last year and sentenced to four months in prison for using forged documents while trying to travel to Dubai using fake Costa Rican passports.
South Korea and the United States requested Kwon's extradition from Montenegro.
TerraUSD is designed to be a “stablecoin,” a currency pegged to stable assets such as the US dollar to prevent radical price fluctuations. However, an estimated $40 billion was wiped off the market capitalization of holders of TerraUSD and its floating sister currency, Luna, after it fell well below the price of one dollar.
