Terraform Labs files for bankruptcy: Bitcoin, LUNC and LUNA fall

Terraform Labs, the company behind the Terra LUNA project that collapsed in May 2022, has filed for bankruptcy in the United States. The company filed its formal application yesterday with the Delaware court, which is the place where bankruptcy courts are most frequently heard in the USA. Delaware bankruptcy courts are also known for concluding cases quickly and efficiently.

According to official documents, the company's debts range from about $100 million to $500 million. It was also stated that the company's assets were also in this range.

Terraform Labs said in a statement that the bankruptcy filing will ease the company's hand in dealing with legal issues, including both the SEC lawsuit and an ongoing lawsuit in Singapore.

CEO Chris Amani said, "This bankruptcy filing will facilitate our work with the community on new projects to develop robust infrastructures and innovation."

Do Kwon, one of the founders of Terraform Labs and the most well-known name of the project, is currently in prison in Montenegro for counterfeiting honey. Kwon is expected to be extradited to the U.S. shortly, and the SEC trial there is expected to begin in March.

There are also many class-action lawsuits filed against Do Kwon in the US, while judicial proceedings are ongoing in Singapore and South Korea.

In May 2022, the project's algorithmic stablecoin, UST, collapsed, and the subsequent declines spread like dominoes, spreading to other crypto companies. Bitcoin, which was over $30,000 at the beginning of May, went down to $17,000 in June after what happened.

After Terraform Labs' bankruptcy filing, there was an increase of nearly 7% in LUNC and LUNA, and Bitcoin fell below $41,000.

Published: January 22, 2024 08:50