Terraform Labs Files for Chapter 11 Bankruptcy Protection
Terraform Labs, the company behind the collapse of the TerraUSD stablecoin, has filed for Chapter 11 bankruptcy protection in the US. Court documents reveal that the company estimates its assets and liabilities to be in the range of $100 million to $500 million each, with approximately 100 to 199 creditors. This move aims to allow Terraform Labs to continue its business plan while navigating ongoing legal proceedings.
Assets and Liabilities Range Between $100-$500 Million
Terraform Labs, co-founded by Do Kwon, has filed for Chapter 11 bankruptcy protection in Delaware. The company’s documents state that its assets and liabilities fall within the $100 million to $500 million range. The collapse of the TerraUSD stablecoin and the LUNA token resulted in losses of at least $40 billion for the crypto market. Despite the bankruptcy filing, Terraform Labs assures that it will fulfill its financial obligations to employees and vendors.
Judge Rules Terraform Labs Liable for Selling Unregistered Securities
Terraform Labs and Do Kwon have been found guilty of violating securities laws by selling unregistered securities, according to a ruling from the SEC lawsuit against them. The documents filed in January reveal that Kwon, who is currently in a Montenegrin prison, owns 92% of Terraform Labs, while Daniel Shin owns the remaining shares. The trial has been postponed to allow for Kwon’s extradition, as his current detention in Montenegro could hinder his timely arrival in the US.
Trial Postponed to Allow for Extradition
The jury trial for Do Kwon, originally scheduled for January 29, 2024, has been postponed until March to allow for his extradition. Kwon’s legal team has cited the slow extradition process and his ongoing sentence in Montenegro as factors contributing to the delay. The SEC has agreed to the later court date, acknowledging the uncertainty surrounding Kwon’s release from Montenegro.
Hot Take: Terraform Labs Faces Bankruptcy and Legal Challenges
Terraform Labs’ filing for Chapter 11 bankruptcy protection highlights the difficulties the company has faced since the collapse of the TerraUSD stablecoin and LUNA token. With significant assets and liabilities and ongoing legal proceedings, the company’s future remains uncertain. While Terraform Labs vows to meet its financial obligations, the bankruptcy filing raises questions about the long-term viability of the business. As the trial against the company and Do Kwon looms, the outcome of the legal challenges will have a significant impact on the crypto community involved with Terraform Labs.
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