NEW YORK (AP) – Terraform Labs has filed for Chapter 11 bankruptcy protection, less than two years after the collapse of its cryptocurrency hit investors around the world.
The Singaporean cryptocurrency company filed for protection in U.S. Bankruptcy Court in Delaware on Sunday, according to court documents. Terraform listed both estimated assets and liabilities in the range of $100 million to $500 million.
Terraform said filing for bankruptcy will allow the company to “execute its business plan while navigating ongoing legal proceedings,” including litigation in Singapore and the United States.
Terraform added that it intends to meet all financial obligations to its employees and vendors during this bankruptcy case and that no additional financing is required. The company also plans to continue expanding its Web3 product.
“We have overcome significant challenges to date and, against long odds, the ecosystem has survived and even grown in new ways post-depeg. We hope that the outstanding legal proceedings will be successfully resolved. We look forward to it,” Terraform Labs CEO Chris Amani said in a prepared statement.
Following the collapse of digital currencies TerraUSD and Luna in May 2022, legal issues for Terraform came to a boil.
Terraform Labs founder Do Kwon was arrested in Montenegro last year and sentenced to four months in prison for using false documents to try to travel to Dubai using a fake Costa Rican passport.
South Korea and the United States have requested Kwon's extradition from Montenegro.
TerraUSD was designed as a “stablecoin,” a currency pegged to a stable asset like the U.S. dollar to prevent rapid price fluctuations. However, TerraUSD and its floating sister currency Luna have fallen well below his $1 peg, erasing an estimated $40 billion in market value for its holders.
