Podgorica, Montenegro – June 16: Do Kwon was transferred out of court on June 16, 2023 in Podgorica, Montenegro. The cryptocurrency TerraUSD and its companion token Luna collapsed in 2022, wiping nearly US$40 billion from the cryptocurrency market, and US prosecutors charged its founder Do Kwon with fraud after his arrest in Montenegro. (Photo by Filip Filipovic/Getty Images)
Philip Filipovich | Getty Images News | Getty Images
Terraform Labs, the company behind the stablecoin TerraUSD, which collapsed and roiled cryptocurrency markets in 2022, has filed for Chapter 11 bankruptcy in the United States, according to court papers filed on Sunday.
In a filing in Delaware bankruptcy court, Singapore-based Terraform Labs listed assets and liabilities ranging from $100 million to $500 million.
Terraform Labs said it will fulfill all financial obligations to employees and suppliers during the Chapter 11 case without the need for additional financing. It also plans to continue expanding its Web3 offerings.
“The filing will allow TFL to implement its business plan while navigating ongoing legal proceedings, including pending representative litigation in Singapore and U.S. litigation involving the Securities and Exchange Commission (SEC),” Terraform Labs said in a statement.
The SEC’s civil case against Terraform and Kwon relates to the collapse of TerraUSD, a “stablecoin” designed to maintain a fixed price of $1, and the more traditional Luna token, which is closely related to TerraUSD.
Recently, a federal judge postponed the SEC’s prosecution against the company and its co-founder, Do Kwon, over an alleged $40 billion cryptocurrency fraud, to enable Kwon’s extradition for his involvement.
Kwon and Terraform Labs have been held responsible for two cryptocurrencies whose collapse caused turmoil in cryptocurrency markets around the world two years ago.
Both cryptocurrencies lost an estimated $40 billion or more when TerraUSD failed to maintain its peg to one dollar in May 2022.