Terraform Labs, the entity responsible for the now-defunct TerraUSD (UST) stablecoin, has initiated bankruptcy proceedings in the United States.
The company filed for Chapter 11 bankruptcy protection at the United States Bankruptcy Court for the District of Delaware, indicating estimated liabilities and assets ranging from $100 million to $500 million, as per a January 21 filing.
In a separate statement, Chris Amani, the CEO of Terraform Labs, stated, “The Terra community and ecosystem have shown unprecedented resilience in the face of adversity, and this action is necessary to allow us to continue working toward our collective goals while resolving the legal challenges that remain outstanding.
We have overcome significant challenges before and, against long odds, the ecosystem survived and even grew in new ways post-depeg; we look forward to the successful resolution of the outstanding legal proceedings.”
According to the bankruptcy filing, the defunct company’s liabilities and assets both fall within the range of $100 million to $500 million.
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This development comes just four days after the U.S. Securities and Exchange Commission (SEC) granted a postponement of Kwon’s upcoming fraud trial until March 25 in response to a request from his legal team.
The Terra ecosystem, overseen by Kwon, experienced a collapse in May 2022.
Following the firm’s implosion, the whereabouts of its co-founder remained unknown until he was apprehended in Montenegro in March 2023 for attempting to use forged travel documents to leave the country.
The SEC initially filed civil charges against Terraform Labs and Kwon in February 2023, accusing both parties of orchestrating a “multi-billion dollar crypto asset securities fraud” linked to the tokens previously known as UST and Terra (LUNA).
The United States and South Korea are both seeking Kwon’s extradition, sparking speculation that he could face multiple sentences in both nations.
Should Kwon be extradited to South Korea, he might potentially confront a 40-year imprisonment sentence in the country where the majority of his alleged crimes were committed.
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