- Terraform Labs, behind the failed stablecoin TerraUSD, filed for bankruptcy amid a market wipeout of over $40B.
- The move navigates legal battles, including with the SEC, while allowing operations to continue.
- Despite fraud indictments of founder Do Kwon, Terraform Labs still aims to rebuild its crypto business.
Terraform Labs, the company behind the failed stablecoin TerraUSD (UST) and cryptocurrency Luna, has filed for Chapter 11 bankruptcy protection in Delaware. The move comes after its digital assets lost over $40 billion in market value in 2022, shaking the crypto industry.
Navigating legal and financial challenges
In a statement, Terraform Labs said the bankruptcy filing will allow it to continue operations and support ongoing legal battles, including with the SEC.
The company plans to meet all obligations to employees and vendors throughout the proceedings, which list estimated assets and liabilities between $100-$500 million.
Future plans amidst legal scrutiny
Terraform Labs was founded in 2018 and quickly grew Luna into a top 10 cryptocurrency before its spectacular collapse last May. Co-founder Do Kwon has since been indicted for fraud in both South Korea and the U.S. over the scheme.
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The SEC trial against Kwon and Terraform Labs had been scheduled to begin this month but has been postponed to March. Despite the legal troubles, Terraform Labs aims to continue building its Web3 business. This month it acquired Pulsar Finance and launched a new cryptocurrency wallet.
“This action is necessary to allow us to continue working toward our collective goals,” said CEO Chris Amani. However, rebuilding trust after the huge losses will prove an immense challenge.
