Terraform Labs Officially Files for Bankruptcy
Terraform Labs, the blockchain company behind the well-known Terra ecosystem, has recently filed for bankruptcy in the United States, approximately a month subsequent to a court ruling that found the company in violation of U.S. laws.
As indicated in legal filings dated January 21, Terraform Labs, headquartered in Singapore, disclosed liabilities ranging from $100 million to $500 million.
Noteworthy among the creditors with the most significant unsecured claims are Alexander Svanevik, the CEO of Nansen at Standard Crypto, and Rasmus Savander, a commercial lead at TokenTerminal.
The filing is anticipated to enable the company to implement its business strategy amidst ongoing legal challenges, including legal proceedings in both Singapore and the United States, notably involving the U.S. Securities and Exchange Commission (SEC), as stated in Terraform Labs’ announcement reported by Reuters.
Following this development, the value of LUNA experienced a decline of more than 5%, settling at $0.62 according to CoinGecko data.
In late December 2023, a U.S. federal judge ruled in favor of the SEC in a case against Terraform Labs and its former leader, Do Kwon, who has been in custody in Montenegro since March 2023 due to his conviction for attempting to use a forged passport to flee to Dubai on a private jet.
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The U.S. court’s decision centered on Terraform Labs and Do Kwon’s sale of two unregistered securities, specifically referencing LUNA, UST, and MIR tokens.
Terraform Labs played a pivotal role in the Terra ecosystem by contributing to the development and support of various projects and protocols within the ecosystem.
Notably, one of Terra’s key products was its algorithmic stablecoin, TerraUSD (UST), which, despite its intention to maintain a peg to the U.S. dollar through algorithmic mechanisms linked to LUNA, faced challenges and ultimately did not succeed.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
