Blockchain company Terraform Labs files for bankruptcy in the United States

The cryptocurrency business responsible for the collapse of the Luna and TerraUSD currencies has declared bankruptcy in the US.

The tokens of Terraform Labs plummeted in May, forfeiting $40 billion of their value and adding to the 2022 “crypto crash” narrative.

Co-founder Do Kwon was found guilty of faking documents, and he is presently incarcerated in Montenegro.

US officials have accused him of scamming investors, and he is currently awaiting extradition.

He could be extradited to South Korea because he is also accused of fraud there.

The corporation is registered in Singapore, where a third legal lawsuit is pending.

The Luna token from Cryptocrash Terraform Labs gained notoriety in December 2021 as its value started to increase from $5 to a peak of $116 in April 2022.

Luna devotees became referred to as “Lunatics,” and Mr. Kwon was called their “king.”

Then all of a sudden, on May 9, 2022, it crashed, losing 99% of its value in a matter of days.

It was designed to remain at a value of $1 since it was algorithmically connected to its stablecoin sister, TerraUSD.

However, the value of TerraUSD crashed to around $0.02, which precipitated a sharp decline in the value of Luna.

In response to the crash, investors withdrew billions of dollars from other cryptocurrencies out of concern of a repeat of the same kind.

It’s believed that the value of Bitcoin and other cryptocurrencies was destroyed to the tune of $400 billion.

CEO of Terraform Labs Chris Amani made the following statement upon announcing the company’s bankruptcy filing: “This action is necessary to allow us to continue working toward our collective goals while resolving the outstanding legal challenges.”

The business released a statement saying, “Terraform intends to meet all financial obligations to employees and vendors during the Chapter 11 case and does not require additional financing to do so.”

With a Chapter 11 bankruptcy, Terraform Labs can carry on with its operations.

The company provides Web3-related services as well as blockchain.

Terraform’s assets are listed in bankruptcy proceedings filed in Baltimore as being between $100 million and $500 million.

Additionally, it is stated that Do Kwon holds 92% of the company’s shares, with Daniel Hyunsung Shin, his co-founder, holding the remaining 8%.

When Mr. Kwon attempted to board a flight to Dubai in March 2023, he was detained in Montenegro.

He was convicted of document falsification three months later, despite his denials, and given a prison term.

Han Chang-joon, the former financial officer of Terraform Labs, was found guilty of the same allegations and received a jail sentence as well.

Police discovered forged Costa Rican passports among their belongings, along with an additional pair of Belgian passports, according to Reuters.

A Montenegrin court authorized his extradition in November 2023; however, it remained unclear if the US or South Korea would receive him.