Terraform Labs

History

2024: Bankruptcy Declaration

On January 21, 2024, Terraform Labs, behind one of TerraUSD's most popular stablecoins, filed for bankruptcy. The corresponding statement was sent to the court of the US state of Delaware. The procedure is carried out in accordance with Chapter 11 of the US Bankruptcy Code, which involves the restructuring of the business and allows the work to continue.

Terraform Labs liabilities are estimated at between $100 million and $500 million. The company's assets are approximately the same amount, and no additional financing is required. In the bankruptcy process, Terraform Labs intends to continue developing Web3 solutions.

Terraform Labs reports bankruptcy

Filing bankruptcy filings will allow Terraform Labs to execute its business plan during ongoing litigation, including processes involving representatives in Singapore and U.S. litigation involving the Securities and Exchange Commission (SEC), the company said.

In May 2022, the TerraUSD stablecoin lost its peg to the dollar, which led to a drop in its value to $0.05. Subsequently, American regulators accused Terraform Labs and its founder Do Kwon of organizing a multi-billion dollar fraud scheme. A court in the southern district of New York adjourned SEC proceedings against the company and Kwon to secure his extradition from Montenegro. The collapse of TerraUSD is said to have sparked unrest in cryptocurrency markets around the world. Investors in crypto assets issued by Terraform Labs, according to various estimates, have lost more than $40 billion.

Terra's community and ecosystem have demonstrated unprecedented resilience in the face of adversity, and bankruptcy is necessary to allow us to continue to work toward our goals while addressing legal challenges, said Chris Amani, CEO of Terraform Labs.[1]

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