Terraform Labs Files for Chapter 11 Bankruptcy Protection
Terraform Labs, the company behind the collapsed cryptocurrency Terra (LUNA), has filed for Chapter 11 bankruptcy protection in the United States. The voluntary petition was submitted to the U.S. Bankruptcy Court for the District of Delaware on Sunday.
According to the court document, Terraform Labs has between 100-199 creditors and estimates its assets and liabilities to be between $100,000,001-$500 million. The document also reveals that Do Kwon, the disgraced founder of Terraform Labs, holds 92% of the company’s shares, while Daniel Shin, who co-founded the company with Kwon, holds 8%.
A Strategic Move for the Terra Community
In a press release, Terraform Labs claims that the bankruptcy filing is a strategic step that will enable it to continue its operations and support for the Terra community and ecosystem. Chris Amani, the current CEO of Terraform Labs, stated that the Terra community and ecosystem have shown unprecedented resilience and that filing for bankruptcy is necessary for resolving outstanding legal challenges.
Amani added that this step protects the company’s ability to continue working with the community on infrastructure, innovative tools, and products, and other ecosystem support. He expressed optimism for the successful resolution of the outstanding legal proceedings.
Do Kwon’s Legal Troubles
Do Kwon was arrested in Montenegro last year while attempting to board a flight to Dubai with forged documents. He is wanted by authorities in both the US and South Korea for his alleged role in the multi-billion-dollar downfall of the Terra (LUNA) ecosystem in 2022.
In December, US District Judge Jed S. Rakoff ruled that Terraform Labs and Kwon offered and sold the company’s native token, LUNA, and its decentralized finance (DeFi) token Mirror Protocol (MIR) as unregistered securities. Rakoff denied both sides’ requests for summary judgment on the fraud claims, which will be decided at a jury trial.
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