Terraform Labs files for Chapter 11 bankruptcy protection
Terraform Labs files for Chapter 11 bankruptcy protection
Terraform Labs Pte Ltd. (TFL), which shook up the cryptocurrency market in 2022, filed for Chapter 11 bankruptcy protection in Delaware, USA, on January 21, 2024.
Chris Amani, CEO of Terraform Labs, said the company took this step as it will allow it to continue to grow according to its business plan while dealing with the legal challenges of litigation in Singapore and the US.
The company's Chapter 11 bankruptcy protection filing in the US Bankruptcy Court for the District of Delaware lists between $100 million and $500 million in estimated liabilities and assets.
It is worth noting that the bankruptcy filing comes days after the US Securities and Exchange Commission agreed to postpone the trial of Do Kwon, Terraform Labs' majority shareholder, until March 25.
According to details from Reuters, Terraform Labs is prepared to meet all financial obligations to employees and vendors during the Chapter 11 process without the need for additional financing.
The crash of Terraform Labs' TerraUSD stablecoin and related Luna token in May 2022 contributed to the collapse of the cryptocurrency market and led to numerous lawsuits. Following these events, Do Kwon fled the company, and his whereabouts remained unknown until his arrest in Montenegro in March 2023.
Do Kwon and Terraform Labs were found responsible for two cryptocurrencies whose collapse in 2022 caused turmoil in cryptocurrency markets around the world.
It's worth noting that Do Kwon's extradition is being sought by the US and South Korea. Many believe that he could be sentenced to multiple prison terms in both countries. At the same time, he could face up to 40 years in prison in South Korea alone.
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