Terraform Labs, the company responsible for the algorithmic stablecoin TerraUSD and its sister cryptocurrency Luna, has recently filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware. The company’s liabilities are estimated to fall between $100 million and $500 million, and its assets are within the same range. This comes after TerraUSD and Luna experienced a collapse in May 2022.
Adding to their troubles, Terraform Labs and its former CEO, Kwon Do-hyeong, were charged with fraud by the U.S. Securities and Exchange Commission in February 2023. Kwon was previously arrested in March of the previous year in Montenegro for traveling with false documents. He is currently awaiting extradition from the country.
The trial against Terraform Labs and Kwon, originally scheduled by the SEC, has been postponed to late March upon Kwon’s request as ruled by the U.S. District Court for the Southern District of New York.