Do Kwon’s Terraform Labs Files for Bankruptcy Protection in US
Terraform Labs, the issuer of the collapsed stablecoin TerraUSD (UST), has filed for Chapter 11 bankruptcy protection in the United States.
The filing by Terraform Labs was officially submitted to the U.S. Bankruptcy Court for the District of Delaware. This action marks a significant legal step for the company in dealing with the repercussions of its financial struggles and the collapse of its cryptocurrency assets.
In its Chapter 11 filing, Terraform Labs disclosed a range of both assets and liabilities estimated between $100 million to $500 million. The filing, necessitated by the significant financial troubles following the collapse of its digital currencies, is aimed at restructuring the company’s debts.
Terraform Labs has committed to fulfilling its financial responsibilities to both its employees and vendors. The company has indicated that this will be achievable without the need for external financial support. Additionally, Terraform Labs has announced its intention to continue the expansion of its web3 offerings, despite the ongoing bankruptcy process.
“The filing will allow TFL to execute on its business plan while navigating ongoing legal proceedings, including representative litigation pending in Singapore and U.S. litigation involving the Securities and Exchange Commission (SEC),” said the company in a statement.
The legal troubles for Terraform Labs and its co-founder, Do Kwon, escalated with the collapse of its two main cryptocurrencies, TerraUSD and Luna, in May 2022. The failure of TerraUSD to maintain its peg to the U.S. dollar triggered a market-wide crisis, leading to a significant loss in value.
The SEC has been pursuing a civil case against Terraform Labs and Kwon, linking their operations to an alleged
Read more on cryptonews.com
