Company behind stablecoin TerraUSD Terraform Labs files for Chapter 11 bankruptcy

Things have gone downhill since the cryptocurrency was no longer able to maintain a one-to-one value with the US dollar.

Terraform Labs

The cryptocurrency industry and adjacent fields have suffered another blow today as the company behind TerraUSD has filed for Chapter 11 bankruptcy. Terraform Labs has filed for bankruptcy in Delaware where listed assets and liabilities range from $100 million to $500 million. This marks another major player in the crypto world succumbing to the times.

On January 21, 2024, Reuters reported that Terraform Labs (TFL) filed for Chapter 11 bankruptcy in the appropriate courts in Delaware. The filings revealed that the company is responsible for assets and liabilities to the tune of $100-$500 million.

TerraUSD coin

Source: Terraform Labs

In 2022, Terraform Labs and its “stablecoin” TerraUSD began to unspool as its crashing price sent Luna’s price to zero dollars. Just a few months after this, Interpol issued a red notice for Do Kwon, founder of Terraform Labs. Kwon was later arrested in Montenegro.

“The filing will allow TFL to execute on its business plan while navigating ongoing legal proceedings,” Terraform Labs said, “Including representative litigation pending in Singapore and U.S. litigation involving the Securities and Exchange Commission (SEC).” As Reuters notes, TFL said it would meet all financial obligations during the case and would need no additional financing.

Remarkably, it seems as though TFL plans to continue its Web3 offerings expansions despite the bankruptcy and the legal woes surrounding its founder.

It’s certainly not a good time for the once-booming industry. While cryptocurrency saw some extreme valuations several years ago, more recent years as seen the industry burst as countless companies have suffered bankruptcy and founders undergo criminal charges. Just recently, FTX founder Sam Bankman-Fried was found guilty on all seven counts of fraud and the GameStop NFT Marketplace is set to shutter in February.

Guides Editor

Hailing from the land down under, Sam Chandler brings a bit of the southern hemisphere flair to his work. After bouncing round a few universities, securing a bachelor degree, and entering the video game industry, he's found his new family here at Shacknews as a Guides Editor. There's nothing he loves more than crafting a guide that will help someone. If you need help with a guide, or notice something not quite right, you can message him on X: @SamuelChandler 

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