Terraform Labs, Creator of TerraUSD, Seeks Bankruptcy Due to Legal Battles
Terraform Labs, the company behind the now-closed TerraUSD (UST) stablecoin, has filed for bankruptcy protection in the United States.
The filing, made on January 21, mentions the company’s estimated liabilities and assets to be between $100 million and $500 million.
The decision to seek bankruptcy protection is due to the legal challenges the company is facing.
Chris Amani, Terraform Labs’ CEO, explained that it’s a necessary step to deal with ongoing legal issues while continuing to work toward their goals.
The bankruptcy filing indicates that Terraform Labs has between $100 million and $500 million in debts and assets. This move comes shortly after the U.S. Securities and Exchange Commission (SEC) agreed to delay Do Kwon’s fraud trial to March 25, following a request from Kwon’s legal team.
It is worth noting that Terra Money, overseen by Kwon, faced a collapse in May 2022. Kwon’s location was unknown until his arrest in Montenegro in March 2023.
The SEC filed charges against Terraform Labs and Kwon in February 2023, accusing them of a “multi-billion dollar crypto asset securities fraud.”
Both the U.S. and South Korea are seeking Kwon’s extradition.
If sent to South Korea, Kwon could face a 40-year jail sentence for the alleged majority of his crimes committed in that country.
These developments highlight the legal complexities surrounding Terraform Labs and their potential impact on the cryptocurrency landscape.
