Terraform Labs Files For U.S. Bankruptcy

The firm behind the ill-fated UST stablecoin said the filing is “a strategic step” that will enable it to continue its operations.

By: Pedro Solimano Loading...

Terraform Labs Files For U.S. Bankruptcy

Terraform Labs, the company behind the now-defunct cryptocurrencies LUNA and TerraUSD (UST), has filed for voluntary Chapter 11 bankruptcy in Delaware.

According to a Jan. 21 filing the firm estimates its total assets between $100M and $500M. Liabilities are estimated to be in the same range.

The move is a “strategic step” that will enable it to continue its operations and support for the Terra community and ecosystem, the company said in a press release shared with The Defiant.

The company plans to continue expanding its Web3 offerings, touting its recent acquisition of Pulsar Finance, a cross-chain portfolio manager.

Terraform Labs has been embroiled in several legal actions after its flagship stablecoin UST – which offered a 20% fixed yield – collapsed and erased $40B of value, prompting a widespread market sell-off.

The Terra implosion in May 2022 also precipitated the downfall of major crypto firms, including Three Arrows Capital.

The U.S. Securities and Exchange Commission (SEC) charged the company and its leader, Do Kwon, with running a multi-billion dollar fraud. In December 2023, a judge ruled against Terraform Labs and its former CEO Do Kwon for offering unregistered securities

Kwon was detained in Montenegro in March 2023 and now awaits extradition to the United States.

[Story corrected Jan. 24 to reflect Do kwon no longer leads Terraform Labs.]