Terraform Labs, the entity led by Do Kwon and previously associated with the discontinued TerraUSD (UST) stablecoin, has sought bankruptcy protection in the United States.
The company sought Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware, revealing an estimated range of $100 to $500 million in liabilities and assets in a filing dated Jan 21.
“The Terra community and ecosystem have demonstrated unparalleled resilience in challenging times, and this step is essential to enable us to persist in pursuing our shared objectives while addressing the unresolved legal issues,” remarked Chris Amani, CEO of Terraform Labs, in a distinct statement.
“We’ve triumphed over substantial obstacles in the past, and despite the odds, the ecosystem not only survived but also expanded in novel ways after the depeg. We eagerly anticipate the successful conclusion of the pending legal proceedings.”
According to the court documents, the now-closed company possesses estimated liabilities ranging from $100 million to $500 million, alongside an equivalent amount in estimated assets.
Terra’s Fall: SEC Postponement, Fraud Trial, & The Unraveling Of Do Kwon Empire
The bankruptcy declaration occurred four days after the U.S. Securities and Exchange Commission (SEC) granted a postponement for Kwon’s impending fraud trial. This delay, requested by his legal team, pushes the trial to Mar 25.
Kwon’s distinctive Terra ecosystem crumbled in May 2022. Following the company’s disintegration, the location of its co-founder became a mystery until his apprehension in Montenegro in Mar 2023. He was arrested for attempting to depart the country using forged travel documents.
In Feb 2023, the SEC initiated civil charges against Terraform Labs and Kwon, accusing them of orchestrating a “multi-billion dollar crypto asset securities fraud” linked to the previously identified tokens UST and Terra (LUNA).
Both the U.S. and South Korea are pursuing the extradition of Kwon. There is increasing speculation that Kwon may face distinct legal consequences in each country.
Should Kwon be sent to South Korea, he might encounter a 40-year imprisonment term in the nation where the majority of his alleged crimes took place.
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