Cryptocurrency firm Terraform Labs, based in Singapore, has filed for Chapter 11 bankruptcy protection in the US less than two years after a major collapse in the company’s cryptocurrency severely impacted global investors.
The filing, made in a Delaware court on Sunday, revealed that Terraform listed both its estimated assets and liabilities in the range of $100 million to $500 million.
Navigating Bankruptcy with Commitment and Optimism
According to court documents, Terraform stated that the bankruptcy filing is aimed at allowing the company to “execute on its business plan while navigating ongoing legal proceedings” in both Singapore and the US.
The company expressed its commitment to fulfilling financial obligations to employees and vendors during the bankruptcy case and emphasized that it does not require additional financing. Terraform also intends to continue expanding its Web3 offerings.
Chris Amani, the CEO of Terraform Labs, commented on the situation, saying, “We have overcome significant challenges before and, against long odds, the ecosystem survived and even grew in new ways post-depeg; we look forward to the successful resolution of the outstanding legal proceedings.”
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Terraform Labs’ Turmoil: Unraveling the Aftermath of the Cryptocurrency Collapse
Terraform’s legal issues escalated following the May 2022 collapse of its digital currencies, TerraUSD and Luna.
TerraUSD, designed as a stablecoin pegged to assets like the US dollar, experienced a significant loss in market value, erasing an estimated $40 billion for its holders.
The aftermath of this collapse led to legal troubles for Terraform Labs founder Do Kwon, who was arrested in Montenegro last year and sentenced to four months in prison for using forged documents while attempting to travel to Dubai with fake Costa Rican passports.
Both South Korea and the United States have requested Kwon’s extradition from Montenegro. The bankruptcy filing marks another chapter in the challenges faced by Terraform Labs amid the fallout from the cryptocurrency collapse.
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