Collapsed crypto firm Terraform Labs files for bankruptcy

San Francisco, Jan 22 (IANS) Singapore-based crypto blockchain company Terraform Labs has filed for bankruptcy in the US following the collapse of its cryptocurrencies in 2022.

The company’s digital assets TerraUSD (UST) and Luna had collapsed and wiped out at least $40 billion in the company’s market value in May 2022.

In February 2023, the US Securities and Exchange Commission (SEC) charged Terraform Labs and its founder Do Hyeong Kwon with orchestrating a multi-billion dollar crypto asset securities fraud.

Terraform Labs has now confirmed its Chapter 11 bankruptcy protection filing, saying it is “a strategic step that will enable it to continue its operations and support litigation pending in Singapore and US litigation involving the Securities and Exchange Commission.”

Terraform Labs’ current estimated assets and liabilities range from $100 million to $500 million.

“The Terra community and ecosystem have shown unprecedented resilience in the face of adversity, and this action is necessary to allow us to continue working toward our collective goals while resolving the legal challenges that remain outstanding,” said Chris Amani, CEO of Terraform Labs.

A court in Montenegro last November approved extradition of Do Kwon, the cryptocurrency entrepreneur behind the crash of TerraUSD and Luna, to either South Korea or the US.

Kwon was arrested in the country in March last year after being caught at the airport with fake documents. Kwon faces multiple counts of fraud charged by US federal prosecutors, in addition to an ongoing investigation in South Korea.