- Terraform Labs, a Singapore-based tech firm, has filed with the Delaware bankruptcy court, disclosing assets and debts between $100-$500 million.
- The company will continue to meet all financial commitments to its staff and vendors during its Chapter 11 bankruptcy proceedings without the need for extra finances.
- Terraform Labs expects to forge ahead with the development of Web3 technologies.
- The firm’s actions seek to enable execution of its business strategies amidst ongoing litigation proceedings including pending litigation in Singapore and legal duels with the Securities and Exchange Commission (SEC).
- The SEC accuses Terraform Labs and its co-founder Do Kwon about a supposed $40 billion cryptocurrency fraud linked to the collapse of TerraUSD and Luna tokens.
- The bankruptcy case of Terraform Labs and Kwon has been postponed by a federal judge to facilitate extradition of Kwon.
- The failure of the TerraUSD and Luna tokens, supposedly managed by Kwon and Terraform Labs, triggered a crisis in the global cryptocurrency markets.
Details of the Bankruptcy Case
Singapore’s Terraform Labs has declared its assets and liabilities to be valued between $100-$500 million in a bankruptcy filing in Delaware.
The tech company assured its obligations to employees and suppliers will be fulfilled during the Chapter 11 proceedings without the need for extra funding, while it concentrates on the expansion of Web3 applications.
Terraform Labs and Ongoing Litigation
The firm discloses that the bankruptcy filing provides the means for Terraform Labs to maintain business operations while addressing ongoing legal battles. These include possible legal action in Singapore and a case with the SEC in the United States.
The SEC lawsuit against Terraform and Kwon arises from the crash of TerraUSD, a stablecoin that was designed to retain a steady $1 value, and Luna, the traditional token related to TerraUSD.
SEC Case against Terraform Labs and Kwon
The SEC’s trial against Terraform Labs and its co-founder, Do Kwon, has been delayed recently by a federal judge. The delay is due to Kwon’s potential extradition linked to a supposed $40 billion cryptocurrency scam.
Two years ago, Kwon and Terraform Labs were implicated in the collapse of two cryptocurrencies, causing a shockwave throughout the global crypto markets.
The alleged loss of these cryptocurrencies is estimated to be at least $40 billion after the failure of TerraUSD to retain its $1 peg in May 2022.
The developments in the Terraform Labs case will most impact the trading of its associated assets, Luna and TerraUSD. This occurrence is likely to induce significant volatility in their value on the cryptocurrency exchange.