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Singapore-based Terraform Labs (TFL), the brains behind Luna and TerraUSD (UST), has made a significant move by filing for Chapter 11 bankruptcy in Delaware. This decision comes in the wake of the 2022 cryptocurrency market crash.
In an official statement, Terraform Labs outlined its rationale behind seeking Chapter 11 bankruptcy protection. The company sees it as a strategic step to ensure the continuation of its operations and to navigate ongoing legal battles, including disputes with the Securities and Exchange Commission.
Terraform Labs asserts its commitment to fulfilling financial commitments to employees and vendors throughout the Chapter 11 proceedings. The company aims to achieve this without requiring additional funding.
As per the court petition, Terraform Labs is accountable to a range of 100 to 199 creditors, with its assets and liabilities estimated to fall within the $100 million to $500 million bracket.
Despite these challenges, Terraform Labs remains steadfast in its mission to expand its Web3 business. Recent developments include the release of Station v3, a cryptocurrency wallet, and the acquisition of Pulsar Finance, a data source and cross-chain portfolio manager.
Chris Amani, CEO of Terraform Labs, expressed the necessity of this action in the face of adversity. He emphasized the resilience of the Terra community and ecosystem while acknowledging the need to address ongoing legal issues.
Terraform Labs, established in 2018, left a profound mark on the cryptocurrency market, with the May 2022 crash erasing a staggering $40 billion in value.
Just days before filing for bankruptcy, on January 29, the U.S. Securities and Exchange Commission (SEC) approved the rescheduling of Terraform Labs' and co-founder Do Kwon's civil trial. The trial pertains to allegations of a $40 billion cryptocurrency scam and is now set for March 25 instead of the original January 29 date.
Do Kwon faces legal troubles in Montenegro due to the alleged use of fake travel credentials? His extradition to the United States or South Korea is pending a decision by Montenegro's Justice Minister, anticipated in March.
The U.S. SEC has lodged charges claiming that U.S. investors who invested in Terra USD and Luna were deceived out of their funds in February of the previous year.
According to the court petition, Do Kwon holds a 92% ownership stake in Terraform Labs, while Daniel Shin, another co-founder of the company, possesses an 8% share in TFL.
editor
A digital nomad exploring the limitless potential of decentralized finance in a centralized economy.