Terraform Labs files for bankruptcy protection in US

TERRAFORM Labs, the company behind the stablecoin TerraUSD, which collapsed and roiled cryptocurrency markets, filed for Chapter 11 bankruptcy in the United States, according to court papers filed on Sunday.

Singapore-based Terraform labs, in a filing with the bankruptcy court in Delaware, listed assets and liabilities in the range of US$100 million to US$500 million.

Recently, a federal judge postponed the trial of the US Securities and Exchange Commission (SEC) against the company and its co-founder, Do Kwon, over an alleged US$40 billion cryptocurrency fraud.

Kwon and Terraform Labs were held responsible for two cryptocurrencies whose collapse caused turbulence in crypto markets around the world in 2022.

The SEC’s civil case against Terraform and Kwon is linked to the collapse of TerraUSD, a “stablecoin” designed to maintain a constant US$1 price, and the more traditional token Luna, which closely associated with TerraUSD.

Both cryptocurrencies lost an estimated US$40 billion or more when TerraUSD failed to maintain its US$1 peg in May 2022. REUTERS