Terraform Labs, the company behind the failed stablecoin TerraUSD, has filed for bankruptcy in the face of lawsuits from the Securities and Exchange Commission (SEC) and Singapore.
A Singapore-based cryptocurrency company filed for Chapter 11 bankruptcy protection in Delaware on Sunday. According to court documents shared with The Hill. Terraform Labs claimed between $100 million and his $500 million in assets and an equal amount of debt.
“The Terra community and ecosystem has shown unprecedented resilience in the face of adversity, and as we continue to work toward our common goals while resolving outstanding legal challenges, , this action is necessary,” Terraform Labs CEO Chris Amani said in a statement. .
“This action allows us to continue collaborating with our community on infrastructure, innovative tools and products, and other ecosystem support.”
Terraform Labs and its founder Do Kwon are facing legal and financial jeopardy due to the company's role in the 2022 cryptocurrency crash.
The company has developed the Terra blockchain, which supports the cryptocurrency Luna and a stablecoin called USDTerra. The price of Luna was intended to rise and fall like other cryptocurrencies, while USDTerra was to remain equal to the US dollar.
However, both coins collapsed in May 2022 amid a widespread decline in crypto prices, wiping out more than $44 billion of Luna and USDTerra investments. Both the company and Mr. Kwon are facing legal action in the SEC and Singapore.
The Terra network and Kwon rose to prominence as cryptocurrencies boomed and the industry began to show its power. Terra had signed a five-year, multi-million dollar sponsorship deal with the Washington Nationals baseball team just three months before its collapse.
“We have overcome significant challenges to date and, against long odds, the ecosystem has survived and even grown in new ways post-depeg. We are confident that outstanding legal proceedings will be successfully resolved. We look forward to working with you,” Amani said in a statement.
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