Terraform Labs has filed for Chapter 11 bankruptcy protection in the United States. The move comes in the wake of legal challenges, including a class action lawsuit in Singapore and ongoing litigation with the Securities and Exchange Commission (SEC) in the U.S.
Terraform Labs is a blockchain startup that created the Terra blockchain, TerraUSD, and LUNA. The company was founded in 2018 and is based in Singapore. Terraform Labs aims to create a more accessible and user-friendly blockchain platform for payments and other financial applications.
The company has raised significant funding from investors, including Binance, Huobi, and Polychain Capital. Terraform Labs has also acquired other companies, such as Pulsar Finance, a cross-chain portfolio manager and data provider.
However, in 2022, the value of TerraUSD and LUNA collapsed, wiping out billions of dollars in investor wealth. The collapse of TerraUSD and LUNA led to a class-action lawsuit in Singapore and a trial in the United States from the Securities and Exchange Commission (SEC).
According to court documents filed on January 21, Terraform Labs listed its assets and liabilities in the range of $100-$500 million.
Despite the bankruptcy filing, the company emphasized its commitment to meeting all financial obligations to employees and vendors during the Chapter 11 case without requiring additional financing. Additionally, Terraform Labs expressed intentions to continue expanding its Web3 offerings.
The bankruptcy filing will allow Terraform Labs to execute its business plan while navigating ongoing legal challenges. The company’s former CEO, Do Kwon, is in Montenegro custody for using falsified travel documents to leave the country.
Do Kwon, also known as Kwon Do-hyung, is a former South Korean businessman and software engineer. He co-founded Terraform Labs. However, he has faced legal troubles that have affected his personal life, including arrests and extradition requests from both the United States and South Korea.
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