Court documents in Delaware reveal Terraform’s assets and liabilities estimated between $100 million to $500 million, with 100 to 199 creditors.
By Bhushan Akolkar
Edited by Julia Sakovich
Updated
3 mins read
Terraform Labs Pte. Ltd, the digital-asset venture co-founded by Do Kwon, has officially filed for Chapter 11 bankruptcy protection in the United States. Court documents, submitted in Delaware on Sunday, reveal that the company’s estimated assets and liabilities both fall within the range of $100 million to $500 million. Additionally, the number of creditors is anywhere between 100 and 199.
Do Kwon, who is wanted by authorities in both South Korea and the US, gained notoriety following the 2022 collapse of his TerraUSD stablecoin and Luna token. The fallout from this event resulted in losses of at least $40 billion and contributed to a broader $2 trillion decline in the cryptocurrency market. The incident exposed vulnerabilities in the digital asset space, leading to a series of bankruptcies.
Currently in custody in Montenegro for using a fake passport, Kwon faces extradition to the US by mid-March. He is likely to face charges related to his alleged orchestration of a major fraud. The court documents identify Kwon as the majority shareholder of Terraform Labs, holding a 92% stake, with another South Korean entrepreneur, Daniel Shin, owning the remaining portion of the Singapore-incorporated company. Speaking on the development, Terraform Labs Chief Executive Officer Chris Amani said:
“The Terra community and ecosystem have shown unprecedented resilience in the face of adversity, and this action is necessary to allow us to continue working toward our collective goals while resolving the legal challenges that remain outstanding. 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.”
The Chapter 11 bankruptcy filing by Terraform Labs comes just four days after the US Securities and Exchange Commission (SEC) granted a postponement for Kwon’s upcoming fraud trial, rescheduling it for March 25 following a request from his legal team.
The Terra ecosystem, under Kwon’s leadership, experienced a collapse in May 2022, leading to a series of legal troubles. Authorities apprehended Kwon in Montenegro in March 2023 when he attempted to exit the country using falsified travel documents, ending the period during which his whereabouts remained unknown.
The SEC initiated civil charges against Terraform Labs and Kwon in February 2023, accusing them of orchestrating a “multi-billion dollar crypto asset securities fraud” concerning the tokens formerly known as UST and Terra (LUNA).
With both the US and South Korea seeking Kwon’s extradition, speculation is growing about potential multiple sentences in both countries. If extradited to South Korea, Kwon could face a substantial 40-year jail sentence, given that the majority of the alleged crimes occurred in that country. The unfolding legal saga continues to attract attention and scrutiny within the crypto and legal communities.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
